Articles on Pharmacy Benefit Management

Diabetes Pharmacy Spending Could Jump 70% in Coming Years

Reprinted from the June 1, 2007, issue of DRUG BENEFIT NEWS, biweekly news, data and business strategies for health plans, PBMs and pharmaceutical companies.

Spending on diabetes drugs is expected to soar roughly 70% through 2009, according to new data from Medco Health Solutions, Inc. While the projected spending growth is certainly catching the attention of payers, pharmacy executives say there is no cause for alarm, as money spent up front on diabetes drugs can save significantly more dollars on the back end.

An aging population and a rising incidence of obesity are driving up spending growth rates on diabetes drugs by between 16% and 20% annually, according to Medco's 2007 Drug Trend Report, released May 17. Meanwhile, utilization of these therapies is increasing each year by 8% to 10%, and patients are increasingly using new drug combinations to reach blood-sugar targets, Medco says.

Spending on diabetes drugs rose 14.5% from 2005 to 2006, while the use of diabetes drugs climbed 5.1% during that period, according to the trend report. Diabetes drugs were the second leading contributor to total drug spending growth in 2006, trailing only cholesterol drugs, the report finds.

"Diabetes drugs went from being the No. 4 contributor to the growth in spending to No. 2 in a single year," says Lon Castle, M.D., director of Medco's medical policy and clinical quality. He predicts that diabetes drugs will take the top spending slot in 2007.

New Drugs Contribute to Spending

The introduction of new types of diabetes drugs is another factor driving spending. New therapies include Pfizer Inc.'s first-in-class Exubera, an inhaled form of insulin, and Merck & Co. Inc.'s Januvia (sitagliptin). But the effect of these drugs on Rx spending is really now just being felt, he adds. "They came out late enough that they didn't really have as much impact on the 2006 spending as they will on the 2007 spending growth," Castle says.

Medco has programs in place to control spending costs on diabetes drugs, he noted. These include programs promoting generic drugs first, making sure patients use agents appropriately, and ensuring they don't use a second-line agent as first-line treatment. "But in reality it is about ensuring appropriate spending for diabetes rather than controlling it," Castle says. "For the people who have diabetes, the most important thing is to make sure they're adherent with their therapy."

Things that burden the health care system are the complications with diabetes: heart disease, kidney disease and vascular disease, he explains. "Those are the things that really cost plans money," Castle says. "If you can attack those with appropriate use of medications up front, the money you're going to save is on the back end. We've done studies that show [return on investment] for diabetes treatments is about 7 to 1."

In one Medco study, for example, the most Rx-compliant diabetic patient had half of the hospitalizations and emergency-department visits, and half the health care costs, compared with the least compliant diabetic patient.

"I wouldn't get too caught up in trying to control diabetes costs like you do in some other drug categories," Castle says. "Make sure the use is appropriate, make sure that you use generics wherever possible — you still want to institute some fiscal controls that are reasonable. But your main goal should be working on compliance."

Aggressive Treatment Drives Usage

Aetna, Inc. also says it has seen utilization and spending on diabetes drugs soar. For example, in the class of diabetes drugs known as thiazolidinediones (TZDs) — which includes GlaxoSmithKline's Avandia (rosiglitazone maleate), a blockbuster drug that was the subject of a recent safety warning — spending in 2007 to date has increased 24% from the same period last year, according to Mark Rubino, chief pharmacy officer at Aetna. TZDs are more expensive on a unit-cost basis because there are no generics available yet, he adds.

For example, 30 tablets of 8-mg Avandia sold for $183.84 at drugstore.com, while 30 tablets of 1,000-mg generic metformin sold for $17.99 at the online drug store.

Aggressive treatment of diabetes is helping push the spending trend, Rubino notes. Still, he says the increased utilization and spending in the diabetes category is not a cause for alarm: "Our financial people understand the value in saving medical costs, and they don't look at this as an area where we could or should restrict."

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