Pharmaceutical Commerce - May/June 2017 - 8
Top News US Drug 2016 sales, at $450 billion, moderate to single-digit growth Latest QuintilesIMS report sees 5.8% growth in 2016; more emphasis on 'net-price' spending The Use of Medicines report from QuintilesIMS Institute has traditionally provided a reliable measure of trends in drug spending across the spectrum, both in terms of therapy categories, as well as distribution channels such as retail vs. hospital. The newly published report for 2016 finds that the double-digit growth of the past two years (it was 12.2% in the previous year) has moderated to 5.8%, or $450 billion. In recent years, QuintilesIMS has refined its analysis of ex-manufacturer p r i c i n g ( n ow c a l l e d " i nvo i ce - p r i ce spending, or the nominal price with which drugs go to market, versus the "net-price" spending, a measure of the revenue actually received by manufacturers after various discounts are factored in). On a net-price basis, QuintilesIMS estimates US industry revenue at $323 billion, up 4.8% from the previous year, and a growth rate almost half of the 8.9% increase in 2015. Last year, QuintilesIMS projected a 6-9% CAGR for medicines through 2020; now it is projecting a 4-7% CAGR range, with invoice price spending reaching $580- 610 billion by 2021. A factor in this growth slowdown is the "atypical" introduction of hepatitis C treatments, beginning in late 2014 and continuing; the number of patients treated jumped from less than 20,000 annually to almost 250,000 in the space of a year, and has since dropped to 226,000 annually. The high and unexpected jump in medical costs back then, which rattled the entire healthcare ecosystem, kicked off the current heightened focus on drug costs. QuintilesIMS estimates that the growing number of drugs in the hep C category are both lowering the invoice price of drugs, as well as generating discounts of as much as 50% for existing products on the market. (Merck's Zepatier treatment, approved in 2016, is reported to list-price at $56,400, well below the $80-90,000 of the first new treatments). And while some 645,000 patients now have a nominal cure of their disease (remission rates of more than 90% are typically seen), some 2-4 million more patients are yet to be treated. Re-infection rates are not yet known. The discounting battle The difference between manufacturers' list prices, and the revenue they actually receive, is a bone of contention between the industry, its critics and its trading partners that is rising in intensity. QuintilesIMS, using what it calls its "proprietary derived estimate" of discounting's effects, projects a roughly 35% difference between the two. A few industry spokespeople (notably Heather Bresch, Mylan CEO) blame intermediaries like pharmacy benefit managers (PBMs) for dr iv ing pr ice increases; as the drug price rises, so does the discount. PBMs and others point the finger the other way, blaming industry pricing practices for drugs' higher costs. QuintilesIMS data back up the industry stance, to a degree: on a per capita basis (which washes out changing patient populations, itself a driver of spending growth), real net spending growth has averaged 1.1% per year since 2006-from $805 per capita to $895 over the past 10 years. "Underlying these trends are complex and confidential negotiations between multiple stakeholders, setting price, rebate, and usage protocols intended to control the trend of overall medicine spend," says the QuintilesIMS report. "As a result of the opaque system of pricing, it is difficult for many stakeholders to understand if they are achieving the same level of modest growth as seen for manufacturer's net revenues." What has become clearer, however, is that patients are seeing a higher hit to their pocketbooks. While, according to QuintilesIMS, average out-of-pocket (OOP) costs across the board for patients h ave d e c l i n e d by $ 1 . 1 9 p e r 3 0 - d ay prescription since 2013, patients with high-deductible insurance plans are seeing eye-watering OOP increases, especially in the deductible period of their policies (typically at the beginning of each year). Manufacturers have responded w ith more generous "OOP offsets" (primarily coupons); meanwhile, 19% of brand prescr iptions, and 34% of specialt y medications, have copays and coinsurance set according to the list price (rather than a discounted price paid by insurers) of the drugs. The end result of all this is that some patients, in some commercial insurance plans, pay very high prices at least for part of the year. "After a year of heated discussion about the cost and affordability of drugs, the reality is that after adjusting for population and economic growth, total spending on all medicines increased just 1.1% annually over the past decade," said Murray Aitken, SVP and executive director of the QuintilesIMS Institute, in a statement. "Understanding how the dynamics of today's healthcare landscape impact key stakeholders is more important than ever, as efforts to pass far-reaching healthcare legislative reforms remain on the political agenda." Biologics shine The QuintilesIMS report measures netprice revenue for biologics at $103 billion in 2016, crossing the $100-billion milestone and up 13% from the previous year. Biologics' introduction into commercial use is not without its disappointments: 8 Visit our website at www.PharmaceuticalCommerce.com May | June 2017 SALES BY CHANNEL 2016 Billion $, ex-manufacturer sales 2012 Total US market 2013 2014 2015 2016 % change 317.8 331.5 378.5 425.3 450.0 5.8% Retail and Mail 227.4 237.2 272.9 307.1 322.7 5.1% Chain stores 106.3 108.5 121.8 131 138.1 5.4% Mail service 60.9 65.6 82.3 98.1 105.3 7.3% Independent 36.5 36.9 42.1 47.9 49.8 4.0% Food stores 23.6 26.2 26.8 30.0 29.5 -1.7% 90.4 94.3 105.6 118.2 127.3 7.7% 39.5 42.5 48.4 56.1 63.1 12.5% Non-federal hospitals 28.1 28.5 30.0 33.0 34.3 3.9% Long-term care 13.9 14.1 16.2 16.6 16.7 0.6% Non-retail Clinics HMO 2.8 3.1 3.9 4.8 5.2 8.3% Federal facilities 2.5 2.4 2.7 2.6 2.9 11.5% Miscellaneous 0.9 0.9 1.0 1.2 1.3 8.3% Source: QuintilesIMS National Sales Perspectives, Pharma Commerce Fig. 1. PRESCRIPTIONS DISPENSED, MILLION % change millions* 2013 2014 2015 5,521 5,664 5,806 5,917 6,113 3.3% Retail and Mail 5,141 5,244 5,364 5,479 5,667 3.4% Chain stores 2,854 3,028 3,191 3,300 3,415 3.5% Independent 887 902 919 931 941 1.1% Food stores 650 656 662 676 725 7.2% Mail service 749 657 591 572 586 2.4% 380 420 443 439 447 1.8% Total US market Non-retail (long-term care) 2012 2016 2015-6 *counts are normalized for varying prescription lengths Fig. 2. Repatha (evolocumab) and Praluent (alirocumab) cholesterol treatments based on monoclonal antibodies, introduced with much fanfare (and concern over their cost) last year, represented less than 0.001% of the market at the end of the year, as most prescribers stuck with the older statin drugs, which are now almost entirely off-patent. Biotech companies are looking to the excitement around immuno-oncology drugs (see p. 15) as one element in future growth; rare disease treatments are also p ro m i s i n g . T h e b i g g e s t c l o u d ove r biologics is the introduction of biosimilars; according to QuintilesIMS data, two biosimilar products now occupy 42% of the market for filgrastim, one of the older biologics. The pipeline for biosimilar introductions is growing, especially for those already commercialized in Europe and elsewhere, and where clinical outcomes data will help persuade prescribers. Channel trends Where patients fill their prescriptions affects what they pay; from a manufacturer's perspective, ensuring that medicine is available at the dispensing point the patient prefers is an important commercialization factor. Continuing a years-long trend, retail chains are the leading channel in prescription fulfillment, representing 30.1% of the net-invoice revenue (Fig. 1), and 55.9% of dispensed prescriptions (Fig. 2; this figure does not include clinic- or hospital-dispensed drugs; also, it is adjusted to convert one 90-day prescription to three 30-day ones). While the across-the-board net invoice revenue grew by 5.8% in 2016, retail chains almost matched that (growing 5.4%-see Fig. 1). Independent pharmacies fell off the pace-their growth was 4.0%-and their proportion of dispensed prescriptions was a couple percentage points below overall prescription growth. The big winner in net-price revenue was mail order, up 7.3%, while the big winner in prescription growth was food stores, up 7.3%, nearly double the overall growth in prescriptions.
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