Growth in cost of medicine moderated in 2016, study finds

Despite outrage in the past year over price spikes for particular drugs, inflation for total medication costs moderated significantly in 2016, according to a new report, as more patients used generic drugs and low-cost pharmacies.

Eagan-based Prime Therapeutics said Thursday that its nearly 20 million clients saw overall drug spending grow by 2.5 percent last year, compared with annual increases of 5 percent to 10 percent in previous years.

Earlier this month, St. Louis-based Express Scripts, which is the nation's largest pharmaceutical benefits manager (PBM), also issued a report citing moderate growth in medication spending during 2016.

For several weeks last year, lawmakers expressed outrage over steep markups in the price of EpiPens that can save patients from fatal allergy attacks — just one of several recent examples of heightened scrutiny over the cost of particular drugs.

"We have seen, certainly, instances in 2016 of unsustainable pricing increases," said David Lassen, Prime's chief clinical officer, in an interview. "But overall I think the utilization of the programs as a PBM that Prime offers has shown … our ability to control drug costs for our clients."

PBMs manage the pharmacy portion of health insurance benefits. They negotiate prices with drug manufacturers as well as the pharmacies that dispense medications. PBMs also advise health plans on "formularies" that assign particular drugs to tiers with different copay requirements — a mechanism for steering patients to medications with the best negotiated discounts.

The report from Prime Therapeutics said clients saved $2.2 billion from the company's management tools.

Diabetes medications comprise the top source of nonspecialty drug spending, Prime said, with costs growing 18 percent in 2016. Among specialty drugs, treatment costs grew at a high rate for medications that treat rheumatoid arthritis and other autoimmune disorders.

"We continue to see drug spending shifting from traditional to specialty drugs," Lassen said in a statement.

In 2014-15, concern over growing drug prices focused on specialty medications for hepatitis C that were remarkable for offering most patients the chance of a cure to the disease. The drugs were priced at nearly $1,000 per pill, with patients taking one pill per day for three months.

But spending on the hepatitis drugs actually has moderated significantly, Lassen said, as the number of patients with the disease declines and PBMs have more success negotiating price discounts.

Prime Therapeutics employs about 3,600 people in Minnesota. The state's growing PBM sector includes the OptumRx division at Minnetonka-based UnitedHealth Group. Prime Therapeutics is collectively owned by 14 Blue Cross and Blue Shield insurance companies, including Eagan-based Blue Cross and Blue Shield of Minnesota.

Twitter: @chrissnowbeck