Pharmacy Benefit Management Tools “Helped Restrain Drug Spending Growth in 2006″

(Washington, DC)—While expanded access and use of prescription drugs among Medicare seniors drove drug trend higher in 2006, greater use of generic medicines “helped restrain drug spending growth in 2006,” according a new report from researchers from the Centers for Medicare & Medicaid Services (CMS). CMS notes that during 2006, generic dispensing increased to 63 percent of prescriptions, up sharply from 56 percent of prescriptions in 2005 and that pharmacy benefit management (PBM) tools such as tiered copayment structures, copayment waivers, and step therapy were among the primary factors encouraging the use of generic drugs.

“Pharmacy benefit managers are helping to keep prescription drug prices stable, while also expanding access,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. “The report shows that proven pharmacy benefit management tools like tiered copayment structures, copayment waivers, and step therapy are major factors helping to hold down drug trend.”

The new prescription drug data are contained in a report, “National Health Spending in 2006: A Year of Change for Prescription Drugs” authored by researchers from CMS. Key findings include:

• Increased drug use and other “non price” factors were the primary drivers influencing the prescription drug expenditure trend. At 8.7 percent, prescription drug expenditure growth rate in 2006 was far below the 13.4 percent average growth rate experienced between 1994 and 2004.
• Increased drug use and other “non price” factors were the primary drivers influencing the prescription drug expenditure trend. At 8.7 percent, prescription drug expenditure growth rate in 2006 was far below the 13.4 percent average growth rate experienced between 1994 and 2004.

The generic dispensing rate in 2006 was 63 percent, up from 56 percent a year earlier. Researchers found that increased generic utilization was as a result of:

• Continued use of tiered copyament structures, waivers, and step therapy;
• More generics coming to market as a result of the loss of patent protection for a number of brand-name prescription drugs; and
• Lack of new blockbuster drugs.

Specifically, CMS researchers state in the report that, “This increased use of generic drugs, which on average have a much lower price than similar brand-name drugs, helped restrain drug spending growth in 2006.”

PBMs have been pioneers in the effort to increase the use of generics as a proven avenue to lowering costs and increasing access. These efforts have included advocating for a clear regulatory pathway for the creation of biogenerics and requiring that doctors in Medicare use electronic prescribing (e-prescribing). Both of these issues would save consumers and payors billions. E-prescribing alone reduces drug costs by an estimated 4 percent by encouraging the use of less costly generic and brand drug alternatives whenever clinically appropriate, according to the Gorman Health Group.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D.

Contact Information:
Charles Coté 202-207-3605