The 2010 CVS Caremark Book of Business drug

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1 Drug Trends Gaining Insight Into the 2010 Drug Trend and Beyond Anna A. Theodorou, RPh, MBA; and John A. Szychowski, AAS, BS The 2010 CVS Caremark Book of Business drug trend was 2.4%, the lowest in 6 years. 1 More than 50% of our clients had a 2010 gross drug trend of less than 5% (Figure 1) and nearly one-fourth of them had negative trends. What has driven this dramatic change, given that 10 years ago drug trend was in the double digits? What will impact the major components of drug trend in the next several years? At 0.8%, the 2010 nonspecialty gross drug trend excluding Medicare Part D was the lowest reported in 6 years. The major moderator of drug trend was the drug mix at -3.5%, driven by the increased utilization of generics, a smaller number of blockbuster brand-name drugs, and the effectiveness of CVS Caremark generic drug programs. BACKGROUND In 2010, the United States continued to face a healthcare marketplace deeply affected by a harsh economic climate. The unemployment rate continued to hover around 10%, and the agency responsible for tracking labor market activity announced it would change the way it measures long-term unemployment to reflect the fact that another 10% of the country s approximately 15 million jobless have been looking for work for 2 years or more. Data show that the percentage of American adults younger than 65 years who lack health insurance and either delay or forgo needed care because of cost is on the rise even as the prevalence of diabetes, cancer, heart disease, and other serious conditions is growing. Not all of the news in 2010 was discouraging, however. With more brand drugs available as generics and the increased use of older generics, the generic dispensing rate (GDR) continued to increase to 72.8% in the fourth quarter of One of the major contributors to our increased GDR has been the increased utilization of generic Zocor, which has resulted in a corresponding decrease in cost more than a 27% reduction in gross cost per day in 2010 compared with The greatest potential impact on future trends is the Patient Protection and Affordable Care Act (PPACA), healthcare reform legislation that President Obama signed into law in March PPACA promises to expand new coverage to millions in the coming years; in fact, it already permits adults under 26 years old to continue coverage as dependents under their parents non-grandfathered (ie, new or recently modified) medical plans, regardless of marital or student status. Other provisions mandate first-dollar coverage of certain preventive care services in non-grandfathered plans, including aspirin therapy and screening for chronic illnesses (eg, cancer, cholesterol, diabetes) that will impact the utilization trends. METHODOLOGY This analysis is a retrospective study of 22.6 million CVS Caremark members who used more than 240 million prescription claims. The population identified for the study was a representative sample of members across a variety of plan sponsors including health plans, managed care organizations, Medicaid, unions, national and local employers, and government agencies (excluding Medicare) located throughout the United States. Only clients with stable membership (limited to a ±20% change in eligibility over 24 months) that have prescription claims in the entire 24-month study period were included. The CVS Caremark s computerized, deidentified database was used to study the utilization by days of supply and gross cost per member per year. The time frame was January 1, 2009, through December 31, Utilization was based on the change in the number of unique utilizers, average days of supply, and total prescriptions compared 176 The American Journal of Pharmacy Benefi ts May/June

2 Gaining Insight Into the 2010 Drug Trend and Beyond Figure 1. Client Trend Distribution 2010 CVS Caremark Percentage % 15.4% More than 50% of plan sponsors had a trend of less than 5% 14.6% 11.6% 9.0% 14.6% < > Gross Trend (%) Source: CVS Caremark Book of Business Metrics ; December 2010 Drug Trend Cohort Excluding Medicare Part D (January-December 2009 vs January-December 2010). year-over-year (YOY). All metrics increased, including the number of utilizers, the total number of scripts, and the volume based on total days of supply in 2010 compared with KEY FINDINGS At 0.8%, the 2010 nonspecialty gross drug trend excluding Medicare Part D was the lowest reported in 6 years. The major moderator of drug trend was the drug mix at -3.5%, driven by the increased utilization of generics, a smaller number of blockbuster brand-name drugs, and the effectiveness of CVS Caremark generic drug programs. The greatest drivers of drug trend were price (3.6%) and utilization (2.5%). Utilization growth during 2010 had partly to do with signs of recovery in the economy, and can probably also be partly attributed to the affordability of generic drugs now available and an increased focus on adherence programs. Rising specialty drug utilization (13.7%) was also a contributor to cost and utilization trends. The nonspecialty drug trend (0.8%) was significantly lower in 2010 compared with the previous 6 years (Figure 2). The nonspecialty drug mix was dominated by generics. The overall (mail and retail) GDR in December was 73.1%. For the year (year-to-date December), the GDR was 71.5%. Major generics are often launched at the end of the year. In November 2009, generic versions of the blockbuster drugs Prevacid and Valtrex were released. In 2010, all business segments continue to show an upsurge in generic dispensing, with a significant increase in December following the launch on November 29, 2010, of generic Aricept, which captured a 34.9% share of antidementia agent claims as of December 2010 (Table). The generic for another blockbuster, Ambien CR, was launched at the end of the year. In addition, in 2010 Lovenox and Yaz generics launched earlier than were anticipated. The GDR increase in the Book of Business impacts price trend because of the average wholesale price deflation over time associated with competition between multiple generic manufacturers. ANALYSIS AND DISCUSSION IMPACT TO PRICE TREND The major impact on price trend was the continued double-digit price increases in top brand drugs. This increase was offset by the price erosion of generics both old and new. Several top therapeutic classes had significant reductions in gross cost per day and a corresponding decline in utilization of higher cost brands. For example, the top-ranked statin (lipid-lowering) class saw an overall lower gross cost per day in 2010 despite Lipitor s 9.46% gross cost increase, due to the drug s continued loss of market share to older generics in the class. Lipitor s market share fell by 3.8% YOY, while the market share of generic Zocor (simvastatin) rose by 2.5% (with a lower gross cost per day of more than 27%); the market share of generic Pravachol (pravastatin) also increased by 1.1% (with a corresponding cost per day reduction of more than 34%). This market share shift and the associated price erosion were primary reasons for the increase in GDR overall and the decline in gross cost trend. Other key classes that experienced this dynamic were the proton pump inhibitors, antihypertensives, Vol. 3, No. 3 The American Journal of Pharmacy Benefits 177

3 n Theodorou Szychowski Figure 2. Drug Trends for Specialty and Nonspecialty Drugs, % 13.2% 13.5% 12.2% 13.7% 4.3% 4.0% 2.8% 3.8% 0.8% Nonspecialty Specialty Source: CVS Caremark Book of Business Metrics ; December 2010 Drug Trend Cohort Excluding Medicare Part D (January-December 2009 vs January-December 2010). antidepressants, nonbarbiturate hypnotics, and miscellaneous anticonvulsants. IMPACT TO UTILIZATION TREND We calculated utilization trend as the change in days of supply per member per month. Utilization can be affected by many factors, including new drug approvals and/or new approved indications, reformulations, offlabel drug use, changing demographics (eg, our aging population), benefit designs, pharmaceutical promotional spending, and new treatment guidelines. New Drug Approvals 2010 According to The Pink Sheet s annual recap, the Food and Drug Administration (FDA) approved 15 new molecular entities (NMEs) in 2010 (Figure 3), the lowest number since 2007 (in which 16 NMEs were approved), and only 1 more than the lowest number in recent history, 14 in A major impact on drug trend that is predicted for the next several years is the continued decline of NMEs and increased approval and availability of more costly biologics. The lower number of NMEs approved in 2010 means that the biologics share of novel approvals by the FDA s Center for Drug Evaluation and Research reached a new high of 28%, just above the previous record of 24% in It is predicted that this trend will continue, especially with the continued consolidation of the pharmaceutical industry, the delay of FDA approvals, and the focus on biologics in the pipeline. We identified the following drugs as the most significant new brand-name entries in 2010; they are likely to have a strong potential impact on future utilization, cost, and overall trend: Ampyra (dalfampridine) twice-daily tablets were approved by the FDA in January 2010 for the novel indication of improving walking ability in adults with multiple sclerosis. Ampyra carries a $12,850 annual price tag and may be taken concomitantly with 1 of the injectable disease-modifying drugs such as Copaxone, Avonex, Rebif, or Betaseron, which act to reduce the frequency of relapses or clinical exacerbations of the disease. 3 Victoza (liraglutide), a once-daily injectable glucagon-like peptide-1 analogue for type 2 diabetes, was approved by the FDA in January Its US sales of $156 million through the end of October exceeded expectations and prompted manufacturer Novo Nordisk to revise its expectation that Victoza would achieve blockbuster Table. Generic Dispensing Rate in 2009 Compared With 2010 Source November 2009 December 2009 YTD December 2009 November 2010 December 2010 YTD December 2010 Overall Book of Business 68.8% 69.5% 68.2% 72.6% 73.1% 71.5% YTD indicates year-to-date. Source: CVS Caremark Generic Utilization by Month and Business Segment (All Ages), YTD December 2009 Based on Earnings Report, Industry Analytics, February The American Journal of Pharmacy Benefits May/June

4 Gaining Insight Into the 2010 Drug Trend and Beyond Figure 3. New Molecular Entity Versus Therapeutic Biologic Approvals Since 2005: Trending Toward Convergence? As the mix of CDER approvals evolves, therapeutic biologics have shown gradual but consistent growth in the face of a more variable, but trending lower, number of NMEs NME Approvals BLA Approvals BLA indicates Biological License Application; CDER, Center for Drug Evaluation and Research (US Food and Drug Administration); NME, new molecular entity. Source: Reference 2. (>$1 billion in sales) status by 2012, rather than 2015, as originally predicted. 4 Gilenya (fingolimod) once-daily tablets were approved by the FDA in September 2010 as a first-line treatment for patients with relapsing forms of multiple sclerosis. This first-in-class drug was launched in October 2010 with a monthly wholesale acquisition cost of $3689. A Gilenya patient assistance program provides out-of-pocket prescription coverage of up to $800 per month and $10,400 per year for eligible patients with commercial health insurance, regardless of their income level or medical history. 5 Gilenya is distributed via specialty pharmacy. Although Gilenya is not without its own safety concerns, it is expected that Gilenya will be popular with multiple sclerosis patients on the strength of its convenience as an oral therapy, and that it will improve adherence rates because it is easier to administer. Pradaxa (dabigatran) twice-daily capsules were approved by the FDA in October 2010 for prevention of stroke and systemic embolism in patients with nonvalvular atrial fibrillation, or abnormal heart rhythm. It is the first anticoagulant to enter the market since Coumadin (warfarin) was approved in the 1950s. 6 Pradaxa is exponentially more expensive than generic warfarin, which has been available since The shift from generic warfarin to branded Pradaxa will impact both our GDR and cost. Several notable therapeutic and other biologics also were approved in These are less likely to have a material impact on utilization for a variety of reasons, however, not least of which is their typically high cost and limited treatment populations. Most significant of the new biologics approved in 2010 are the following: Actemra (tocilizumab), Provenge (sipuleucel-t), Prolia (denosumab), and Krystexxa (pegloticase). As new drugs come available, prescribing guidelines are updated and may impact utilization trend. NEW TREATMENT GUIDELINES In 2010, new guidelines from the International AIDS Society USA (IAS-USA) advise earlier treatment for HIV and include for the first time Merck s Isentress (raltegravir) as a recommended front-line option. According to the 2010 guidelines, treatment with antiretrovirals is recommended for patients with a CD4 cell count of less than or equal to 500/mL for asymptomatic patients, compared with the group s 2008 guidelines, which recommended starting treatment at levels of 250/mL. The revised IAS- USA guidelines also recommend Isentress as a component of the initial antiretroviral regimen for the first time. The practical impact of the IAS-USA guidelines in the United States is somewhat unclear, as American practice is mainly influenced by the recommendations of the Department of Health and Human Services. In December 2009, the Department updated its guidelines to recommend treatment earlier at the 500/mL level and also to include raltegravir as a recommended front-line treatment option. 7 The American Society of Clinical Oncology released guidelines recommending the use of aromatase inhibitors that include AstraZeneca s Arimidex, Pfizer s Aromasin, and Novartis Femara, to treat breast cancer in postmenopausal Vol. 3, No. 3 The American Journal of Pharmacy Benefits 179

5 n Theodorou Szychowski women. The cancer group suggested that most patients should consider treatment with aromatase inhibitors either right after surgery or after 2 to 3 years of using the antiestrogen drug tamoxifen. About 75% of these cancers are estrogen-receptor positive. Studies have shown that women who took tamoxifen for 5 years were 50% less likely to have their cancer return, and the aromatase inhibitors have similar effects. MODERATORS OF UTILIZATION: SAFETY OR WARNING UPDATES AND DRUG WITHDRAWALS Safety concerns and drug withdrawals tend to have a negative impact on utilization. In October, the FDA warned patients and healthcare providers about the possible risk of atypical thigh bone (femoral) fracture in patients treated with bisphosphonates. A labeling change and medication guide will reflect this risk. While it is not clear whether bisphosphonates are the cause, atypical femur fractures, a rare but serious type of thigh bone fracture, have been predominantly reported in patients taking bisphosphonates. The optimal duration of bisphosphonate use for osteoporosis is unknown, and the FDA is highlighting this uncertainty because these fractures may be related to use of bisphosphonates for longer than 5 years. 8 On September 30, 2010, the FDA took action against companies that manufacture, distribute, and/or market unapproved single-ingredient oral colchicine, a medication commonly used for the daily prevention of gout. The companies are expected to stop manufacturing single-ingredient oral colchicine within 45 days and must stop shipping the unapproved product within 90 days. A small amount of unapproved colchicine is expected to be available after these dates until supplies are exhausted. URL Pharma s Colcrys is the only FDA-approved singleingredient oral colchicine product now available in the US market. 9 In November 2010, the FDA requested that the generic manufacturers of propoxyphene-containing products (marketed under the brand names Darvon and Darvocet) voluntarily remove these products from the market. Propoxyphene, an opioid, is used to treat mild to moderate pain. The move was based on clinical data demonstrating that propoxyphene causes an increased risk of dangerous abnormalities in heart rhythm. The FDA estimated that propoxyphene was used by 10 million people in 2009, with most of them receiving the drug in combination with acetaminophen (Darvocet). Darvon was originally developed by Eli Lilly, but it no longer sells the drug. Propoxyphene drugs are now marketed only by generic-drug makers. 10 Patients taking propoxyphene currently will need to consult with their physicians about possible alternatives; undoubtedly, many will switch to more powerful opioid pain products. As seen in recent years, safety warnings impact entire therapeutic classes in both market share and overall gross trend. THE FUTURE: 2011 AND BEYOND The Employment Situation in 2010 Over the last few years, we have seen client membership fluctuate ±20% compared with previous changes of ±15%. This change may be due to the economy and consolidation of major industries. The Bureau of Labor Statistics reported that the number of unemployed persons decreased by 556,000 to 14.5 million and the unemployment rate fell to 9.4% from November to December 2010; over the year, these measures were down from 15.2 million and 9.9%, respectively. Employment rose in leisure and hospitality and in healthcare but was little changed in other major industries. Among the major worker groups, the unemployment rates for adult men (9.4%) and whites (8.5%) declined in December. The unemployment rates for adult women (8.1%) and teenagers (25.4%) showed little change. The number of long-term unemployed (those jobless for 27 weeks or more) in December was little changed at 6.4 million and accounted for 44.3% of the unemployed. 11 An aging population coupled with a more sedentary lifestyle and poor diet have led to an increase in consumption of healthcare services. A good example is the increase in the percentage of adults with diabetes. According to the Centers for Disease Control and Prevention, the percentage of adults with diabetes has grown from 8.5% in to 11.9% in Similarly, it was reported that hypertension levels rose from 28.9% to 32.6%, and obesity from 29.9% to 33.7%. Heart disease and cancer are also reported to be on the rise. However, the Centers for Disease Control and Prevention did have some good news. It reported that the percentage of adults with high cholesterol level was reduced from 17.7% to 14.6%. This may be due to the increased use of lipid-lowering agents. 1,12 Baby Boomers Impact Baby boomers make up 28% of the 2010 trend cohort membership and account for 45% of the gross spending. Beginning in January 2011 and for next 19 years, an additional 10,000 Americans will become eligible for retirement every day, representing a significant number of 180 The American Journal of Pharmacy Benefits May/June

6 Gaining Insight Into the 2010 Drug Trend and Beyond Figure 4. Significant Generic Releases and Generic Utilization E Generic Dispensing Rate Depakote ER Topamax Adderall XR Cellcept Prevacid Valtrex 68.2% Mirapex Cozaar Hyzaar Flomax Effexor XR Arimidex Yaz Gemzar Lovenox Aricept 71.5% Concerta Nasacort AQ Levaquin Lipitor Xalatan Femara Zyprexa 71%-75% Actos/Avandia Lexapro Seroquel Plavix Provigil Detrol LA Diovan/HCT Singulair Zometa Niaspan Aciphex 75.0%-79.0% E 2012E Source: Generic Prospective Pipeline Analysis Summary Reports ; CVS Caremark, January 2010; Internal Analysis, Industry Analytics, CVS Caremark, March members who will move from commercial and employer plan sponsors to Medicare Part D plans. 13 The number one health-related fear of baby boomers is Alzheimer s disease. Antidementia agents will be a class to watch in the coming years. This class was one of the leading components of spending in our Medicare-only Book of Business (ranked 7th, at 3.5% of total gross cost) in 2010, and these agents ranked 19th in our all-business segment, where they represented 1.3% of total gross cost. Significant New Drug Candidates in 2011 The coming year could see the entry of a second oral anticoagulant, Johnson and Johnson/Bayer s Xarelto (rivaroxaban). 14 Other significant potential new approvals in 2011 include 2 hepatitis C agents, telaprevir and boceprevir, 15 Benlysta (belimumab) for lupus, and the antiplatelet drug Brilinta (ticagrelor). Vertex Pharmaceuticals telaprevir and Merck s boceprevir have demonstrated the ability to boost hepatitis C cure rates significantly and allow some people to cut their treatment time in half, thus lessening how long they must deal with the drugs side effects. If approved, these drugs would be the first that work by directly targeting the hepatitis C virus. 16 Benlysta would be the first drug approved for lupus in more than 50 years, since Bayer s anti-malarial Atabrine in November While prevalence figures are in dispute, lupus is thought to afflict as many as 1.5 million American women, commonly in their child-bearing years. As Benlysta s manufacturer has indicated that the drug would be priced somewhere between the cost for rheumatoid arthritis drugs ($15,000-$20,000 per year) and multiple sclerosis treatments ($20,000-$30,000 per year), 18 it could have a substantial impact on cost. Changes in Prescribing Guidelines In 2003, the National Institutes of Health published the Seventh Report of the Joint National Committee on Prevention, Detection, Evaluation, and Treatment of High Blood Pressure and is currently working on updating the guidelines, with an expected release in spring The other major guidelines that will be updated include Detection, Evaluation, and Treatment of High Blood Cholesterol in Adults (Adult Treatment Panel IV), with an expected release date of fall Depending on the recommended changes, this could impact both utilization and cost trends. Generic Utilization Impact: Lipitor, Zyprexa, Concerta, and Levaquin Generics on the Horizon The continued release of generics will have a significant impact on gross drug trend and generic dispensing rate (Figure 4). Vol. 3, No. 3 The American Journal of Pharmacy Benefits 181

7 n Theodorou Szychowski Leading the generic releases in 2011 is Pfizer s Lipitor (atorvastatin), which presents the biggest generic opportunity ever, with Pfizer reporting $5.33 billion in US brand sales in Under a 2008 patent settlement with Pfizer, Ranbaxy is allowed to enter the market on November 30; as the first to file an Abbreviated New Drug Application for generic atorvastatin with the FDA, Ranbaxy will be entitled to a 180-day marketing exclusivity period upon receiving final marketing approval from the agency. In addition to Ranbaxy s generic, Watson was granted the exclusive right by Pfizer to sell an authorized generic for 5 years and will launch in November Although the market share of Lipitor is great, the combined Zyprexa, Concerta, and Levaquin market shares account for billions of dollars in US sales. Cymbalta and Singulair also have significant market share in their respective therapeutic classes. A nonmedical indicator that may impact near-future utilization is the severe weather in early 2011, which delayed members ability to get a prescription filled. In addition, the continued increase in gasoline and food prices in an already fragile economy may cause some members to ration their prescription utilization, especially in the case of higher brand copays. Author Affiliations: From the Division of Industry Analytics & Outcomes (AAT, JAS), CVS Caremark, Scottsdale, AZ. Funding Source: None reported. Author Disclosures: The authors (AAT, JAS) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article. The content is solely the responsibility of the authors and does not necessarily represent the official views of CVS Caremark. Address correspondence to: Anna A. Theodorou, RPh, MBA, Director, Industry Analytics & Outcomes, 9501 East Shea Blvd, Mail Code #034, Scottsdale, AZ anna.theodorou@caremark.com. REFERENCES 1. Theodorou A, Slezak J. Factors affecting pharmacy trends in Am J Pharm Benefits. 2009;1(1): Silverman B. Few, but fast and on time: 2010 saw low NME count, but almost all were first cycle approvals and FDA met most user fees. The Pink Sheet. January 24, Smith L. Acorda sets Ampyra price above estimates, reaps benefit of clean labeling. The Pink Sheet. February 8, Merrill J Drug launches: a year of firsts offers hope for a rebound. The Pink Sheet. January 3, Berman-Gorvine M. Novartis Gilenya: efficacy, patient assistance lie at heart of marketing push. The Pink Sheet. October 11, Haley S. FDA Pradaxa approval balances efficacy and bleeding risk. The Pink Sheet. October 25, Hayes E. Merck s Isentress gets boost from guidelines calling for earlier HIV treatment. The Pink Sheet Daily. July 19, US Food and Drug Administration. Safety update for osteoporosis drugs, bisphosphonates, and atypical fractures. FDA Drug Safety Communication. October 13, US Food and Drug Administration. FDA orders halt to marketing of unapproved single-ingredient oral colchicine [press release]. September 30, US Food and Drug Administration. Xanodyne agrees to withdraw propoxyphene from the U.S. market [press release]. November 19, The Bureau of Labor Statistics. The employment situation 2010 [press release]. January 7, 2011: Theodorou A, Johnson KM, Szychowski JA drug utilization and cost trends in lipid-lowering agents. Am J Pharm Benefits. 2010;2(4): Cohn DV, Taylor P. Baby boomers approach age 65 glumly. Pew Research Center. December 20, Merrill J. Oral anticoagulants market snapshot: big bucks, but payers are on guard. The Pink Sheet. October 25, Haley S. Drop two, add one: Vertex adjusts adaptive trial seeking an all-oral HCV regimen. The Pink Sheet Daily. December 30, Neergaard L. New hope for hepatitis C, an often hidden disease. The Associated Press. January 17, Dombrowski C. Benlysta decision likely to be delayed by negotiations on labeling. The Pink Sheet. November 22, Hayes E. Market snapshot: after Benlysta breakthrough, how high the sky in lupus. The Pink Sheet. October 12, The American Journal of Pharmacy Benefits May/June