Subtitle Prescription drug spending increased 73 percent since 2010 CHICAGO – Rising costs for patent-protected drugs are driving double-digit annual growth in pharmaceutical spending in the U.S., according to a new study by the Blue Cross Blue Shield Association (BCBSA). The report, “Rising Costs for Patented Drugs Drive Growth of Pharmaceutical Spending in the U.S.,” analyzes seven years of drug utilization, price changes and overall spending. It shows that prescription drug spending has increased 10 percent annually for Blue Cross and Blue Shield (BCBS) members since 2010, an overall rise of 73 percent.* “This upward trend is due to a small fraction of emerging, patented drugs with rapid uptake and large year-over-year price increases that are more than offsetting the continued growth in utilization of lower-cost generic drugs,” said Maureen Sullivan, chief strategy and innovation officer for BCBSA. “Current trends suggest that this rapid rise in drug trend costs is likely to continue in future years.” Other key report findings include: • Over the past seven years, generic drugs increased from 66 percent to 82 percent of total prescriptions filled, while brand drugs’ share of total prescriptions declined from 34 percent to 18 percent. The rising cost of brand drugs has allowed these prescriptions to maintain the vast majority of total drug spending, at 78 percent, roughly the same proportion brand drugs held in 2010. • The cost of brand drugs with patent protection and no generic alternatives is rising at an average annual rate of 25 percent (and 285 percent since 2010), more than double the 10 percent average annual rate of spending for all drugs. These patent-protected drugs now make up 63 percent of total drug spending, up from 29 percent of total spending in 2010, despite the fact that they comprise less than 10 percent of total prescriptions filled. • A list of the top 25 patent-protected drugs in terms of spending in 2015 demonstrates dramatic increases in spending. For example, spending on the drug Gilenya** increased 30,257 percent over a seven-year period. “The data highlighted by this report is reflective of what we're seeing – aggressive pricing strategies and new product launches, particularly on specialty drugs, are a big driver of the increases and these are real dollars affecting payers and members," said Steve Johnson, assistant vice president of health outcomes for Prime Therapeutics. “Fortunately PBMs have management strategies that recognize and leverage innovative new therapies offering clinical outcomes while at the same time encourage remaining generic opportunities to bring some cost relief to our plans and members." This is the twelfth study of the Blue Cross Blue Shield, The Health of America ReportSM series, a collaboration between the Blue Cross Blue Shield Association and Blue Health Intelligence, which uses a market-leading claims database to uncover key trends and insights into health care affordability and access to care. For more information, visit www.bcbs.com/healthofamerica. * The report examines the medical claims of more than 30 million BCBS commercially-insured members per year (non-Medicare) and more than $208 billion in prescription spending from January 2010 through September 2016. Unit prices were computed as the total cost of the prescription divided by the days supplied, or the average daily price of the prescription. ** All product names, logos and brands are property of their respective owners and used for identification purposes only. Use of these names, logos and brands does not imply endorsement. About BHI Health Intelligence Company is the nation’s premier health intelligence resource, delivering data-driven insights about healthcare trends and best practices, resulting in healthier lives and more affordable access to safe and effective care. HIC accesses healthcare claims data from more than 140 million individuals nationwide, collected over nine years, in a safe, HIPAA compliant and secure database. The resulting conformed, reliable data set has the broadest, deepest pool of integrated medical and pharmacy claims, reflecting medical utilization in every ZIP code. Health Intelligence Company, LLC operates under the trade name Blue Health Intelligence (BHI) and is an Independent Licensee of BCBSA. For more information, visit http://www.bluehealthintelligence.com/.