Health systems, including inpatient and non-acute environments, can expect a 3.29% increase for pharmaceutical purchases made from Jan. 1 to Dec. 31, 2021, according to Vizient's July 2020 Drug Price Forecast. The increase will be driven by both the ongoing disruption caused by COVID-19 and enduring market trends unrelated to the virus.
There has been uncertainty in many aspects of drug utilization during the COVID-19 pandemic. But upward industry trends such as very high prices for novel treatments (like gene therapies and immunotherapy for cancer) and routine price increases for frequently prescribed medications, have maintained a level of continuity.
Pediatric pharmaceutical costs are also rising as a result of the targeting of rare diseases that require specialty or orphan drugs. Fortunately, the continued introduction of generic medications and an expanding catalog of available biosimilars are serving to blunt some of the impact of price increases on hospital budgets.
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WHAT'S THE IMPACT?
The top 10 COVID-19 medications have seen a combined spend increase of $200 million, according to Vizient. Over the course of two months, March and April 2020, drugs associated with COVID-19 patients showed a considerable increase in spend, compared with the same time period in 2019.
For example, hydroxychloroquine, a previous treatment option for COVID-19, experienced a 1,132% increase in spend during that time. Each of these 10 drugs experienced an increase of more than $5 million in acute care spend, with a combined total reaching $200 million.
Pediatric pharmaceutical spending will also continue to rise. Driven by the targeting of rare diseases that require specialty or orphan drugs, Vizient forecasts the spending for pediatric pharmaceuticals to increase by 3.16%. Due to the costs of the novel therapies and drug-shortage challenges, hospitals have had to seek out alternative treatments, which have had further impacts on their expenditures. The pediatrics market could also be heavily affected by the delays and suspensions of clinical trials during the pandemic.
Specialty drugs continue to drive price increases, with a projected 4.47% inflation rate for specialty drugs, plus an ongoing surge in demand for specialty pharmaceuticals during the pandemic. This rate is much higher than both the general drug inflation rate predicted for 2021 and the most recent projection of 3.36% for the July 1, 2020–June 30, 2021 time period.
Meanwhile, the "biosimilar effect" continues to take hold. While the launch of competitive products has taken longer, biosimilars for rituximab, bevacizumab and trastuzumab are increasingly eroding the financial impact of their branded counterparts. Vizient noted that, while no applications have yet been filed, bringing insulins under regulation as biologics creates the opportunity for the approval of interchangeable versions of these commonly used products.
WHAT ELSE YOU SHOULD KNOW
Home infusion therapies are anticipated to increase during the pandemic. At the height of the initial surge, ambulatory infusion centers were reporting an average decrease in new patient visits by 24%. During that time, the Centers for Medicare and Medicaid Services temporarily relaxed provisions for home infusion therapy services. Due to its success, Vizient anticipates continued and increased interest in home infusion care, including for oncology products, though the extent of this service remains controversial.
Another highlight: Spending for vaccines decreased substantially in March and April of 2020. Comparing year-over-year data for the first two months of the COVID-19 outbreak, spending on the top 10 vaccines decreased. For example, the spend for meningococcal group B vaccine decreased 49%, and the measles, mumps and rubella vaccine was down 56%. It is unknown what the long-term clinical and financial impact will be for patients who may now be more susceptible to preventable diseases.
THE LARGER TREND
Drug costs have been an ongoing problem for hospitals, health systems and everyday Americans. After reviewing tens of millions of insurance claims for the country's 49 most popular brand-name prescription drugs, a team from Scripps Research Translational Institute found last summer that net prices rose by a median of 76% from January 2012 through December 2017 – with most products going up once or twice per year.
The substantial price increases were not limited to drugs that recently entered the marketplace, as one might expect, or to those lacking generic equivalents. The increases were also often "highly correlated" with price bumps by competitors.
Meanwhile, a drug-cost survey published last year found that unfilled prescriptions remain a problem, with 73% of physicians taking the patient's responsibility for cost into account in making a prescribing decision. Almost as many physicians, 70%, said they believe the high cost of prescribed medications leads to unfilled prescriptions.