| March 5
March 5 Cheaper generic drugs in 2012 brought
down spending on treatments for common diseases like high
cholesterol for the first time in 20 years, according to a
report from the largest manager of U.S. pharmacy benefits.
A rise in spending on specialty drug treatments offset that
decline, however, and drove total U.S. payments for prescription
drugs up 2.7 percent last year, Express Scripts Holding Co
said on Tuesday.
Spending on drugs to treat high cholesterol and high blood
pressure fell 1.5 percent among customers who receive their
prescription benefits through commercial insurers, the report
For Express Scripts, profit margins on generic drugs are
higher than those on more-expensive branded drugs. Companies
that provide their employees' insurance also encourage the use
of generic drugs to bring down their healthcare costs.
The lower prices for common drugs came after the patents on
branded versions ran out, putting cheaper generic competitors
onto the market. Big pharmaceutical companies like Pfizer Inc
and Merck & Co hold the patents on drugs for
about a decade after they start selling them. Then competitors
like Teva Pharmaceuticals Ltd can start
selling their own generic versions.
President Barack Obama's healthcare overhaul law rewards the
use of generic drugs as a way to decrease healthcare spending,
which rose about 4 percent last year and accounts for about 17
percent of gross domestic product.
The patent for Pfizer's Lipitor, a cholesterol treatment
that was once the world's best-selling drug, expired in November
2011. Cheaper generics hit the market soon after, which sharply
reduced spending on treatments in 2012.
"The move towards lower-cost generic alternatives has had a
tremendous impact," said Sharon Frazee, vice president research
and analytics at Express Scripts.
In commercial insurance plans, the average price of medicine
for high cholesterol fell nearly 10 percent to $47.87 for a
30-day supply in 2012.
Express Scripts processed 1.4 billion prescriptions in 2012,
including for Medicare insurance for elderly people and Medicaid
for the poor and disabled. It prepares separate reports for
The company said this was the first decrease in commercial
insurance prescription spending for the most common drugs since
1993, when it began collecting data.
Spending on specialty medications, which include rheumatoid
arthritis, cancer and hepatitis C drugs, rose 18.4 percent in
2012. These specialty drugs, which can cost more than $10,000
per month, accounted for 24.5 percent of the nation's total
spending on prescription drugs.
Prescription drugs for diabetes accounted for the biggest
share of customer outlays on any treatment class. Spending on
those medicines rose 11 percent, outpacing 2011's increase of 7
Both the cost and use of diabetes drugs went up, Frazee
said. About one-third of Americans are diagnosed as obese, which
has led to an increase in the number of people diagnosed with
Spending on hepatitis C increased 34 percent, more than any
other type of treatment, primarily because of two new drugs that
hit the market in May 2011 - Vertex Pharmaceuticals Inc's
Incivek and Merck's Victrelis. Spending is due to
increase 32 percent in 2013 and another 56 percent in 2014, the
Prices of brand-name drugs rose 12.5 percent in 2012,
according to the Express Scripts Prescription Price Index, which
is based on a basket of the most highly used of those