2016 Drug Trend Report

The topic of drug prices in the United States is a conversation of ever-growing frequency and intense debate.  Compounded with healthcare reform legislation and high-deductible plans, it is an issue of high importance to all Americans.  Although there are mountains of data regarding this topic, a study by Express Scripts summarizes the top 15 of therapy classes in an easy-to-follow format.  Express Scripts recently released its 2016 Drug Trend Report based on pharmacy claims from 30 million members of Express Scripts.  The report shows a 3.8% increase in drug spending and an 11% increase in list prices of brand drugs.  Here is a snapshot of their top 10 therapy classes, ranked by per-member-per-year (PMPY) spend (dollar amounts rounded):

1. Inflammatory Conditions. With a PMPY spend of $118 and an average cost per prescription of $3,588, this class topped the chart.  These drugs are used to treat conditions such as arthritis, psoriasis, and Crohn’s disease.  The report states that this PMPY spend trend will continue at 30% year over year through 2019 and also noted that over 41% of patients are nonadherent.

2. Diabetes. This class demonstrated a PMPY spend of $109 and an average cost per prescription of $126.  The report states that this PMPY spend trend will continue at 20% year over year through 2019 and also noted that over 37% of patients are nonadherent.

3. Oncology. This class demonstrated a PMPY spend of $61 and an average cost per prescription of $7,891.  The report states that this PMPY spend trend will continue at 20% year over year through 2019 and also noted that over 35% of patients are nonadherent.

4. Multiple Sclerosis. This class demonstrated a PMPY spend of $59 and an average cost per prescription of $5,056.  The report states that this PMPY spend trend will continue at 10% year over year through 2019 and also noted that over 24% of patients are nonadherent.

5. Pain / Inflammation. This class demonstrated a PMPY spend of $52 and an average cost per prescription of $49.  The report states that this PMPY spend trend will continue at 3% year over year through 2019.  These medications include opioids and nonsteroidal anti-inflammatory drugs, and this class is prolific with generics and has a 95% generic fill rate.

6. HIV. This class demonstrated a PMPY spend of $40 and an average cost per prescription of $1,556.  The report states that this PMPY spend trend will continue at 20% year over year through 2019 and also noted that over 24% of patients are nonadherent.

7. High Blood Cholesterol. This class demonstrated a PMPY spend of $38 and an average cost per prescription of $36.  The report states that this PMPY spend trend will decrease steadily year over year through 2019 and also noted that over 36% of patients are nonadherent.

8. Attention Disorders. This class demonstrated a PMPY spend of $36 and an average cost per prescription of $145.  The report states that this PMPY spend trend will continue at 3% year over year through 2019 and also noted that this class is dominated by generics with a 74% generic fill rate.

9. High Blood Pressure / Heart Disease. This class demonstrated a PMPY spend of $35 and an average cost per prescription of $14.  The report states that this PMPY spend trend will decrease steadily year over year through 2019 and also noted that over 28% of patients are nonadherent.

10. Asthma. This class demonstrated a PMPY spend of $30 and an average cost per prescription of $69.  The report states that this PMPY spend trend will eventually decline by 2019 due to oncoming generics and also noted that over 73% of patients are nonadherent.

The next five therapy classes shown in the report are:  Hepatitis C (#11), Depression (#12), Contraceptives (#13), Heartburn / Ulcer Disease (#14), and Skin Conditions (#15).  The 2016 Drug Trend Report can be found here.

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Shifting Practice Model of Some PCPs

In the United States, physician practice acquisitions were on the rise over the past few years as healthcare reform incentivized hospitals to do so.  During this time, however, studies have questioned the relationship between physician employment and quality of care.  Physicians of all specialties have been impacted by healthcare reform legislation and the subsequent acquisitions, perhaps most notably are the primary care physicians.  Consequently, there has been an increase of these physicians converting their practices into concierge medicine or direct primary care.  A recent study by Kareo and the American Association of Private Physicians sought to study key trends in some independent medical practices.  Rob Pickell, Chief Strategy Officer of Kareo, notes:

“The majority of Americans continue to receive their care from independent medical practices due to the superior combination of patient focus, healthcare outcomes, and lower costs. Emerging practice models such as direct pay and concierge medicine represent exciting new ways to preserve and enhance the independent practice model.”

The survey targeted physicians who are adding or converting to a direct primary care or other membership model for payment rather than a conventional fee-for-service practice model.  Here are some brief points found in the survey:

70% of respondents reported they wanted to spend more time with patients; 41% wanted to improve their work/life balance; 40% wanted to separate from the insurance payer system

65% of respondents using some variation of a concierge medicine membership model reported their cost for membership was under $2,000 per year; 32 % have one quarter of their patients in membership; 30% have all their patients in membership

58% of respondents are out-of-network with health plans; 57% participate in Medicare; 54% participate in health plans in network

Telemedicine

Virtual care has its place in many practices currently and is certainly gaining momentum, though there are many things to consider before jumping in with both feet.  This survey also demonstrated the growing use of telemedicine.

23% of respondents currently use telemedicine

42% plan to grow and expand the use of telemedicine

Conventional vs Concierge/DPC

Along the lines of different practice models, Rob Pickell stated:

“These newer models also address patient and physician demand for more proactive care, care coordination, and wellness programs. For these reasons, these new practice models should be of interest to both healthcare professionals and patients.”

The survey also shines some distinguishing light on the different models.

79% of physicians employing concierge medicine membership or direct primary care payment models spend an average of 30 to 60 minutes or more on each patient visit

75% of physicians in conventional fee-for-service practices spend 30 minutes or less with each patient

60% of physicians in conventional fee-for-service practices have a patient panel of over 1,000; nearly all of physicians employing concierge medicine membership or direct primary care payment models have a patient panel of less than 1,000

38% of the direct primary care private practices call recruiting new patients their single biggest hurdle

35% of conventional practices said their biggest challenge is remaining financially viable

The survey can be downloaded here.

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Contact ABISA for healthcare consultancy support or speaking engagements.

Generational Attitudes About Healthcare

Millions of Americans are starting to become more engaged with how they manage their health and wellness, but each generation approaches medical care quite differently.  The changes to the healthcare industry are increasingly focused on addressing patients as consumers. Such a change means that providers must of course emphasize quality and work toward price transparency, but they must also seek to determine what patients desire most.  In a recent national survey by Vitals, researchers explained great differences between Baby Boomers, Generational X, and Millennials.  For the purposes of this survey, Millennials were classified as 18-34 years old, Generational X as 35-54 years old, and Baby Boomers as 55-70 years old.  Here is an overview of the survey’s findings:

35% of Millennials have a Primary Care Provider; 64% of Generational X have a PCP; 83% of Baby Boomers have a PCP.

25% of Millennial patients reported using an urgent care center when they are sick.

25% of Generational X patients reported having lost trust in a physician or healthcare organization in the last 2 years.

83% of Millennials trust physicians with their personal information; 77% of Baby Boomers do as well; only 64% of Generational X patients do.

Baby Boomers seek out a physician based on a referral, whereas Millennials look at online reviews.  Generational X patients tend to use a combination of these two approaches.

Millennials tend to trust their physician and follow the medical advice provided, whereas only 50% of Baby Boomers do.  Generational X patients are quite the skeptics, believing that physicians “pretend to know” when in reality the physician is not sure.  Additionally, Generational X’ers are inclined to wonder “if docs really know what they’re doing.”  Consequently, Baby Boomers are open and honest with their physicians and quite agreeable to a team approach to medical care, whereas Generational X patients hold back information from their providers.  Millennials are quite open, but (as with other facets of their daily lives) they will often challenge a physician’s diagnosis.

Vitals also references a study from JAMA Internal Medicine, noting

“Baby Boomers have higher rates of chronic disease, more disability and lower self-rated health than members of the previous generation at the same age.”

This research supports what I often tell clients as we engage in strategic growth initiatives.  To grow your healthcare practice, the group cannot stereotype all patients, but rather must thoroughly understand the unique differences of the particular patient demographics that they serve.  This, combined with understanding your market, can help to differentiate your practice and set it on a path of continued future success.

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Contact ABISA for healthcare consultancy support or speaking engagements.