The drug industry within the US is complex and can be difficult to manage and navigate because of the number of drugs on the market and the lack of transparency. As drugs have become more and more expensive than before it is leading to the frustration we have seen from both patients and payers. Therefore, it is becoming even more important to understand the space and to manage it as tightly as possible to help eliminate any unnecessary spending.

Wasteful Drug Spending

Wasteful spending can occur through a number of ways for payers. Let’s take a look at the following examples:

  1. Me Too Drugs

These are drugs that are generally a “different” version of an FDA approved drug. These commonly come out from a manufacturer whose brand name drug is losing patent, although, that is not always the case. Additionally, they tend to be a higher cost compared to the generic and have no added clinical value over the generic. An example of this includes Vimovo (>$2,000), which is a combo drug of two low-cost generics naproxen and esomeprazole each of which is less than $50.

  1. Rebate Chasing Drugs

These are drugs within a therapeutic class where lower-cost generics exist but a pharmacy benefit manager (PBM) might add the brand name drug at a preferred position to collect rebates. This allows for easier access to the brand name for consumers but will be costly for payers. Examples of this traditionally occur within the topical dermatological therapeutic class.

  1. Coupons

These are cost savings cards or programs that help patients lower their out of pocket costs for expensive brand drugs. These programs can be a double edge sword for payers because they can either help lower costs or increase costs. For specialty drugs, these programs tend to decrease cost for both patients and payers because PBMs have put in place copay/accumulator adjustment programs to best capture the support available. However, for costly traditional brand name drugs, these programs can increase the cost for payers because they help consumers bypass the benefit design which is set up to favor the utilization of lower-cost drugs. An example of this includes Auvi-q copay assistance.

Although, the drug market can be challenging. It can be managed if you are working with the right partners and have the correct expertise which is what we do here at PillarRx. If you would like to learn more or need help managing your drug spend please feel free to reach out and we would be happy to help.