Diabetes drug spending on the rise

March 31, 2016

The sheer volume of diabetes patients has made it a big driver of medication spending. Here are some important formulary considerations.

Diabetes is an epidemic that drives a great deal of costs associated with medications and treatment. About 9% of the U.S. population has diabetes and $176 billion in direct medical costs are associated with the condition, according to the American Diabetes Association.  

Diabetes trend continues to increase. Prime Therapeutics saw greater than 30% trend in this category in 2015 compared to 2014, according to David Lassen, chief clinical officer at Prime. The average cost of a branded product was approximately $275; almost 20% higher than the year before. Prime also saw utilization increase by more than 10%.

“With the aging population and obesity epidemic in the United States, we would anticipate this trend to continue,” Lassen says. “The use of medication is growing across both generic and brand products; however, brand inflationary price hikes and expensive new-to-market products are significantly impacting trend. Managing diabetes is in now exceeding 10% of Prime’s total drug spend.”

Patients with the type 2 diabetes can adapt their lifestyle to manage the disease by changing their diet, exercising and optimizing their weight, says Cynthia Ambres, MD, KPMG Strategy partner and member of the firm’s Global Healthcare Center of Excellence. “We understand that type 2 actually can be eliminated for many with these lifestyle changes, unfortunately, many patients don’t commit to these changes and have additional risks associated with high blood pressure and high cholesterol.”

Between 33% and 49% of patients still do not meet targets for glycemic, blood pressure, or cholesterol control, and only 14% meet targets for all three measures and nonsmoking status, according to a position statement published in Diabetes Care.

Patients who do not manage the disease well are at high risk for stroke, blindness, kidney failure, and peripheral artery disease.

“The sheer volume of diabetes patients has made it a big driver of medication spending. However, multiple studies examined diabetes costs and generally support a correlation of increased adherence and reduced cost related to avoidable hospitalizations,” says Ash Shehata, advisory leader for health plans at KPMG. “So health plans, pharmacy benefit managers and other managed care organizations will place a great deal of emphasis upon medication adherence to save money and also to protect the quality of life of their members.”  

Next: Formulary considerations

 

 

Formulary considerations

All diabetes drugs need to be on managed care's radar, according to Lassen. “It is important to manage the patient population to the most cost-effective and clinically appropriate drugs. Trying generics-such as metformin-is an appropriate first-line therapy. Watching the new drugs coming to market and the cost implications is also vital.”

Although growth continues in the diabetes pipeline, many of the upcoming therapies are “me-too” drugs or new combinations of existing therapies, he says. “Given there are a number of drugs in each category, we can deploy preferred product management and exclusion strategies to help drive use of the most effective medicines.”

“Many diabetics have fairly complex medication regimens,” Ambres says. “The need to balance medications, timing and continued monitoring of blood sugar is an ongoing struggle. Newer medications have helped make it easier to stick to a treatment plan because they have longer-acting formulations or act in combination with other drugs. Some of the drugs that are in the pipeline only need to be administered once a week, which is a significant advance, but they will carry higher price tags for both the insurer and on the part of the patient reflected in their self-pay components.”

New DPP-4 (dipeptidyl peptidase-4) and human glucagon-like peptide (GLP) drugs are both aimed at treating type 2 diabetes and are gaining traction in the market, according to Ambres.

Several DPP-4 drugs, which decrease blood glucose levels, have been on the market since 2006 and more are being introduced. 

“The benefit of the DPP-4s is that the drugs show little risk of causing hypoglycemia [low blood sugar], which can lead to a trip to the emergency department,” says Ambres. “GLP-1 drugs improve insulin sensitivity and have helped patients lose some weight, so some of these diabetes treatments have been mentioning that in their marketing.”

Sodium-glucose co-transporter-2 [SGLT-2] inhibitors lower blood sugar by blocking reabsorption of glucose by the kidney and increasing its excretion in urine, but FDA said it is requiring label changes because of the risk of urinary tract infections and the blood becoming too acidic.

Next: Cost implications

 

 

Cost implications

Newer drugs typically cost health plans more money in terms of pharmacy costs, but the formulations coming out now can improve medication adherence, Shehata says. “Biosimilar versions of insulin could lower some of the costs, but we have not seen them hit the market in the U.S.,” he says. 

The injectable drugs, including the insulins and GLP-1 agonists, are expensive therapies, according to Lassen. There are new combinations coming to market that combine basal insulins with a GLP-1 agonist.

“These combinations are likely to cost thousands of dollars per month,” he says. “The cost of these therapies is not likely going to offset any medical savings from events associated with diabetes. This issue has been brought to the forefront many times recently-making payers and patients ask, ‘What is the true value of these therapies?’ Many new resources are being developed [e.g., The Institute for Clinical and Economic Review (ICER) reports] to try to quantify the value and appropriate pricing of newer agents. Payers are reviewing these recommendations as well as the incremental clinical value to make tough formulary choices.”

Many first-line drugs used for treating diabetes currently are now generic, such as metformin (Glucophage and Glucophage XR extended-release) and glyburide (Micronase, DiaBeta, and Glynase), according to Kimberly White, senior consultant at Numerof & Associates, a healthcare consulting firm.

“A big focus of R&D is finding ways to improve adherence, like inhaled insulin and once-daily insulin, such as recently launched Tresiba, or once-weekly dosing of oral medicines, such as Trulicity,” White says.  

Next: Future considerations

 

 

Future considerations

An aging population that will need more management of diabetes, as well as growing prevalence of type 2 diabetes among younger people because of the obesity epidemic, will keep this category of drug spending and medical management very active, according to Ambres.

“Science could lead this category in very interesting directions, but that will be farther in the future as stem cell treatments are developed and as research on the artificial pancreas makes progress,” she says. 

For example, Clinicaltrials.gov has counted 113 different studies on research for an artificial pancreas.  

Prime anticipates a continued increase of drug spend in this category. “Payers will likely be more aggressive with formulary decisions, utilization management programs and exclusion strategies to try to mitigate the trend while providing appropriate therapy options for their members,” says Lassen. “Health plans may provide additional incentives for their members to prevent the development of diabetes as a way to offset both pharmacy and medical spending.”

Type 2 diabetes is a health problem that can be effectively managed as a chronic disease, according to White. “It will take patients, providers and payers working together to ensure that the patient gets the right intervention at the right time to minimize the long-term cost impact of the disease,” she says.

Type 2 diabetes is no longer just a concern for the elderly, White points out. “Increasingly, people are being diagnosed with the disease at younger ages,” she says. “As younger people are diagnosed with type 2 diabetes, managed care will need to work with patients and providers to ensure good diabetes management.  This may include providing diet and nutritional services, supporting exercise and/or covering medications.”

Tracey Walker is content manager for Managed Healthcare Executive.