April 29, 2017

Rising Drug Costs: Trending 2017

2017 Trends: Rising Drug Costs

The cost of prescription drugs has been rising rapidly since 2010, and will likely continue to rise in 2017.

Frank Magliochetti

The largest drug maker in the United States, Pfizer Inc., raised prices on 133 of its U.S. brand name products in 2015. More than three-quarters of the increases were 10 percent or more. Daraprim, the antiparasitic commonly used to treat toxoplasmosis, went from $13.50 to $750 per pill overnight in September of 2015. The price of Epipens skyrocketed 500 percent, rising from $97 in 2007 to $600 in 2016 for a two-pack set of the emergency treatment for anaphylaxis.

The total net spending on prescription drugs has grown to $309.5 billion annually, according to IMS Health, including discounts, within the past year. This makes prescription drugs the fastest growing segment of the nation’s healthcare economy. At 12.2 percent, 2014 spending on drugs dwarfs the overall frank-magliochetti-2017-medical-trendsgrowth rate of healthcare spending and the rate of spending growth on physician and hospital care. The price of drugs, rather than utilization, is the predominant driving factor in this increased drug spending.

Spending on drugs rose 8.5 percent in 2015 but total prescriptions dispensed increased by a mere 1 percent. The pharmaceutical price inflation was 7.2 percent in 2015, according to the Bureau of Labor Statistics (BLS) Producer Price Index (PPI), significantly outpacing both general inflation and medical inflation at 0.7 percent and 2.7 percent, respectively.

2017 Trends towards Higher Prices

2017 will probably see more increases in drug prices, and the rises costs will likely have a significant effect on consumers and healthcare providers. Price hikes will likely affect employees and young retirees in 2017. The results of Segal’s 2017 Health Plan Cost Trend Survey suggest prescription drug costs will rise 11.6 percent in 2017 for active employees and retirees under the age of 65, on top of 11.3 percent in 2016.

That is a huge leap for most Americans. More than 48 percent of all people living in the U.S. reportcdc-frankmagliochettireport taking at least one prescription drug in the previous month, according to statistics provided by the Centers for Disease Control and Prevention (CDC), and more than 20 percent of Americans use three or more prescription medications. Health plan cost trends have slowed, according to the Segal survey, but they continue to outpace average wage increases and inflation by more than three time.

Patients carry an increasingly heavy financial burden when it comes to drug costs, and so do hospitals faced with difficult decisions regarding the allocation of scarce resources. Inpatient drug spending rose 23.4 percent on average, according to a report by theAmerican Hospital Association (AHA), and 38.6 percent per individual hospital admission. The report details the experience of one hospital that reported that last year’s price increases for just four common drugs were equivalent to the annual salaries of 55 full-time nurses there. Drug prices will likely continue to rise in unpredictable ways while reimbursement amounts from payors will probably increase only a small amount. Hospitals will continue the struggle of balancing resources in response to changes in the drug market.

The rise in specialty drug/biotech medications will be especially high in 2017 at 18.7 percent. While specialty drugs make up less than 1 percent of all medications, the 100 insurance providers responding to the Segal’s survey said that specialty drugs now account for 35 percent of total projected prescription drug cost increases for the next year.

Source

http://www.bloomberg.com/news/articles/2015-10-02/pfizer-raised-prices-on-133-drugs-this-year-and-it-s-not-alone

http://www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015

http://www.bls.gov/ppi/ppidr201512.pdf

https://www.segalco.com/media/2716/me-trend-survey-2017.pdf

http://www.aha.org/content/16/aha-fah-rx-report.pdf

http://www.cdc.gov/nchs/fastats/drug-use-therapeutic.htm

 

Frank Magliochetti is Managing Partner for Parcae Capital.

  • North Andover, Massachusetts

This column of posts is directed at the Healthcare Industry.  Frank plans to release new sites dedicated to the industry  – .  He currently assists companies who are building, restructuring, transforming and resurrecting there business’s. An example of his client base are, Xenetic Biosciences , IPC Medical Corp, Just Fellowship Corp, Environmental Services Inc., Parsons Post House LLC, ClickStream Corporation as well as having a business talk radio show; The Business Architect on the URBN network.

frankmagliochetti_ParcaeCapital

Pharmaceutical Trends for 2017: Biosimilars

Pharma Trends 2017:  Biosimilars

Frank Magliochetti Report

The FDA approved 56 new drugs in 2015 and, of these, 33 were specialty drugs and 23 were traditional. One was a biosimilar. Development, approval and acceptance of biosimilars may become an important trend in 2017.
The FDA is approving more specialty drugs than ever before and specialty medicines will likely face more competition in 2017. Increased FDA approval and frankmagliochetti-report-pharma-trends-biosimilarsdiscoveries of medications to treat orphan conditions and cancer will fuel competition. Biosimilars could overcome development hurdles and increase this competition even more.
Acceptance of biosimilars has been slow in the past. One of the reasons for the reluctance is that the development of biosimilars is different from that of generic drugs. Generic drugs for small molecules have a relative simple chemical structure that makes it easy to reproduce an identical chemical. It is more difficult to make a protein or peptide identical to the original biologic agent because of differences in the sugar residues attached to the protein, for example, or differences in the protein folding that make it unpredictable. This means that, even though a biosimilar has an identical peptide chain, it may not have an identical effect. These factors complicate the process of making biosimilars and increase the risk for problems.
Physician acceptance has been slow too but, as the cost of other medications rise, biosimilars will seem more attractive.
Approval of Biosimilars in 2015 and 2016
Biosimilars, which are products the FDA will approve with evidence that the medication up for approval is highly similar to an already-approved reference product, will probably continue to gain traction in 2017. The FDA has approved four biosimilars as of October 2016.
Zarxio is similar to Neupogen, according to an article published by Managed Healthcare Executive, except the biosimilar has a 15 percent lower list price. Both drugs treat low white blood cell counts associated with cancer and its treatment. The FDA approvedZarxio, made by Sandoz, in March 2015.
Inflectra is similar to Remicade to treat Crohn’s disease and ulcerative colitis. The FDA approved Inflectra in April 2016 but, due to litigation, the launch date is uncertain.
Erelzi, also made by Sandoz, is similar to Enbrel to treat arthritis. The FDA announced approval of Erelzi in August of 2016 and the expected launch date of biosimilar-frankmagliochetti-pharma-trends-2017February 2017 may be delayed.
Amjevita, by Amgen is similar to Humira and is for the treatment multiple inflammatory diseases. Amjevita became the fourth biosimilar drug to gain approval in September 2016. Launch date is set for March 2017 but may experience delays.
There are several biosimilars awaiting approval, including:
• Filgrastim by Grastofil, Apotex
• Pegfilgrastim by Apotex
• SB2 infliximab by Merck/Samsung Bioepis
• CHS‐1701 by Coherus Biosciences
• Epoetin alfa by Retacrit, Pfizer
The need for biosimilars will grow as the need for other drugs, especially cancer drugs and orphan drugs, increases. Doctors diagnose about 1.7 million cases of cancer each year, yet the death rate has fallen 23 percent since the early 1990s, partially due to new medications and treatments. The introduction of biosimilars could reduce cancer death rates even further.
Biosimilars may become one of the strongest trends in the pharmaceutical industry in upcoming years, as biosimilars have the potential to lower the cost for safe and effective treatments for a wider number of patients. Increased development of biosimilar cancer drugs is possible as some biopharmaceuticals lose patent protection.

Source
https://www.uspharmacist.com/article/record-number-of-fda-new-drug-approvals-in-2015
http://www.zarxio.com/index.jsp
http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/five-specialty-pharmaceutical-trends-watch
http://www.fda.gov/newsevents/newsroom/pressannouncements/ucm436648.htm
http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm494227.htm
http://www.erelzi.com/
http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm518639.htm
http://pi.amgen.com/united_states/AMJEVITA/AMJEVITA_mg.pdf
http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm522243.htm

Frank Magliochetti is Managing Partner for Parcae Capital.

  • North Andover, Massachusetts

This column of posts is directed at the Healthcare Industry.  Frank plans to release a new site dedicated to the industry.  He currently assists companies who are building, restructuring, transforming and resurrecting there business’s. An example of his client base are, Xenetic Biosciences , IPC Medical Corp, Just Fellowship Corp, Environmental Services Inc., Parsons Post House LLC, ClickStream Corporation as well as having a business talk radio show; The Business Architect on the URBN network.

frankmagliochetti_ParcaeCapital