The concept behind drug trend reports, now standard fare in the PBM industry, was pioneered by Barrett Toan, former CEO of Express Scripts. Toan believed that the old adage–” you cannot manage what you cannot measure”– applied to pharmacy benefit management. While common knowledge today, at the time, the industry did not understand the basics of how price, utilization, and drug mix contributed to drug trend overall, let alone by therapy class. Hence, the Drug Trend Report (DTR) was born. First published in 1997, the DTR has contributed greatly to the market’s understanding of drivers of drug trend and how to better manage wasteful drug expenditures. The value was seen immediately in the marketplace, as evidenced by the press coverage, the use by policymakers in D.C., and how quickly the other major PBMs followed suit.
Now that drug trend season is upon us, it is a good time to discuss appropriate and potentially inappropriate uses of these reports. In recent years, some organizations have attempted to use book of business drug trends as evidence of PBM effectiveness in managing drug trend. Such comparisons are simply not valid for couple of reasons. First, the magnitude of drug trend across PBMs tend to be more similar than different in any given year; and as the figure below shows, underlying market trends (e.g., new product launches, generic availability) are, by far, the strongest driver of trends from one year to the next. Second, varying methodologies and client mix (e.g., health plan vs. employer, age) in any given year significantly impact drug trend, making direct comparisons highly problematic.
Prescription Drug Trend: 1996 to 2008
The second area of potential misinterpretation relates to meaning of the drug trend number. As drug trends have slowed in recent years to single digits, plan sponsors have certainly felt some reprieve. However, this sense of relief can become problematic when a reduction in drug trend is confused with or viewed to be the same as a reduction in drug spend. Reason being, drug trend only examines the change in drug spend over time and provides no assessment of the appropriateness of the underlying drug spend.
Accordingly, a review of actual drug spend can paint a very different picture of current pharmacy benefit performance than does single digit drug trend. Anticonvulsants are a classic case in point. Drug trend fell nearly 30% in 2009 due to the availability of generics, but prevalence of use grew nearly 5%. Of course, the challenge is that much of the growing use in this class represents off-label use that is not scientifically supported, exceeding 70% in most studies.
Keeping these two caveats in mind, Drug Trend Reports are a useful reference tool in understanding the complexities of prescription trend drivers and cost management tools.