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Cancer and arthritis drugs drive up spending on medicines

Staff writer |
Spending on prescription drugs in the U.S. rose 5.2 percent in 2015, driven mostly by increased costs of expensive specialty medications to treat conditions such as rheumatoid arthritis.

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Spending on specialty medications rose 18 percent, while spending on standard prescription drugs rose less than one percent, according to a new report by Express Scripts. The report is based on the prescription drug spending for the company's 80 million covered patients.

The measure — called "drug trend" in pharmaceutical industry parlance — includes increases in the use of medications and price hikes.

Still, in the health care industry, an increase that's more than quadruple the rate of inflation — 0.7 percent in 2015 — still counts as a bit of good news. Why? In 2014, drug spending increased more than 14 percent.

The overall boost in drug spending was moderated by patients switching to generic drugs from brand names, whose prices rose 16.2 percent.

The company pointed to its initial refusal to pay for Gilead Sciences' hepatitis C drugs, which were listed at more than $90,000 for a course of treatment. Instead, Express Scripts opted to cover an alternative treatment, Viekira Pak made by AbbVie, for which it negotiated a 50 percent discount. Express Scripts has said it saved as much as $1 billion with the deal.

Brand name drug prices are more than 2 1/2 times as high as they were in 2008, while generic prices have declined by about two-thirds.

The report says the surge in spending on specialty drugs was caused in part by the 29 new medications that were approved by the Food and Drug Administration last year, including 19 cancer drugs that are being used on a large number of patients. The prices of older cancer drugs also rose, including for example, the price of Gleevec, which is used to treat adults with leukemia. It went up 19.3 percent last year, the report says.

But drugs for rheumatoid arthritis, psoriasis and other inflammatory illnesses sucked up the largest share of cash. Express Scripts says treatments for such conditions cost every person with insurance about $89 last year. Insurers use a measure known as "per member per year" to show how spending is spread across population of insured people.

Diabetes treatments dominated the spending on nonspecialty medications, the report shows, with spending rising 14 percent last year.

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