Double-Digit Prescription Drug Benefit Cost Increases in 2017?

Prescription drug benefit cost trends for active populations continue to increase at double-digit rates, according to forecasts by The Segal Group, a private consulting firm.

Segal’s 2017 Health Plan Cost Trend Survey of nearly 100 managed care organizations, health insurers, pharmacy benefit managers, and third-party administrators projects the prescription drug cost trend for active employees and early retirees to be 11.6% in 2017, up from 11.3% in 2016. For Medicare-eligible retirees, the prescription drug trend is also projected to be high (9.9%), but lower than the 2016 projection (10.9%).

However, the projected specialty drug/biotech trend rate for 2017 is an exceptionally high 18.7%, and while typically less than 1% of all medications are specialty drugs, survey respondents indicated those drugs now account for 35% of total projected prescription drug cost trends for 2017.

“Given the increasing number of pharmaceutical products now available for conditions that require the use of specialty medications, plan sponsors should consider implementing strategies that manage patients who use these drugs and target their costs,” commented Edward Kaplan, National Health Practice Leader, quoted in a press release. “This can include utilization-management controls, formulary or preferred step-therapy; tiered copayment structure and aggressive specialty drug contracting terms that maximize client and patient value.”

Segal also found that health plan cost trends have gone down compared to 2016, but continue to significantly outpace inflation and average wage increases more than threefold.

While prescription drug cost trend is projected to rise 11.3% in 2017 and the popular open access PPO/POS plan cost trend by 7.8%, wages are projected to increase by just 2.5%. “Plan sponsors will need to apply cost-management strategies to bring trends down to more sustainable levels,” added Kaplan. “Each plan sponsor has a unique set of goals and cost drivers, so strategies will vary. The best strategies will directly address plan design, aggressive vendor contracting, and measurable population health improvement.”