Common Drug Costs Down from Patent Cliff

For the first time in 20 years U.S. spending on prescription drugs actually declined thanks to cheaper generic drugs for common diseases like high cholesterol, according to a new report.

The Express Scripts 2012 Drug Trend Report reported that total spending on traditional prescription drugs fell by 1.5% in 2012. Last year was the year of the patent cliff, which ushered in cheaper generic versions of many blockbuster treatments.

As a result of the patent cliff, utilization was up for eight of the top 10 traditional therapy classes, and yet unit costs decreased for seven. For the second year, the country spent more on drugs for diabetes than any other therapy class. However, the largest increase in total spending for a traditional therapy class was for medications used to treat attention disorders, up 14.2%.

The decrease in spending on traditional drugs was more than offset by an 18.4% increase in spending on specialty medications for diseases like cancer and hepatitis C. According to the report, the FDA approved 22 new specialty drugs in 2012 and most of them will cost more than $10,000 a month for treatment.

Other takeaways about specialty therapies:

• Rheumatoid arthritis, the costliest specialty category, saw spending increase an additional 23%.

• At 33.7%, hepatitis C experienced a larger 2012 increase in drug spend than any other major therapy class.

• Utilization and costs for cancer medications increased by 3.4% and 22.3%, respectively.

The gap between brand name drugs and generic alternatives is ever increasing, according to the report. In 2012, the cost of brand name medications increased 12.5%, while generics declined 24%. During the same year inflation only increased by 1.7%.

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Express Scripts 2012 Drug Trend Report