How Dermatologicals Became a Top Trend Driver

The category contributed 1.8% to 2015 gross trend

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FEATURE
March 8, 2016
Executive Vice President and Chief Operating Officer, CVS Health

Over the last few years, the dermatological category has emerged as a top driver of drug trend. In 2015, the category trended at 39.5 percent and its impact on our gross trend was second only to that of antidiabetics. Of the full-year CVS Health 2015 trend of 5.0 percent, the dermatologic category contributed 1.8 percent.

What’s behind this category spike? Although one word (onychomycosis --or toenail fungus) may come to mind, the answer is far more complex. Toenail treatment Jublia was the top trend driver in the category, but it’s not the whole story. The dermatologic category is diverse. It includes oral and topical drugs that treat multiple conditions. Generics account for more than 80 percent of dermatological prescriptions dispensed to CVS Caremark members, but specialty drugs also contribute significantly.

New drugs, high prices, heavy promotion drove antifungal trend to triple digits

Toenail fungus medication Jublia alone pushed antifungal trend to more than 161%


Jublia, the top trend driver among drugs in the dermatological class, was one of two new products approved for toenail fungus in 2014. Drug company Valeant promoted it heavily to consumers, including during the 2016 Super Bowl at a reputed cost of $4.5 million. The ads don’t mention the drug’s cost, over $500 per bottle. The promotional campaign was very effective. Utilization growth for Jublia topped 700 percent in 2015. Copay coupons are easily accessed online and provided directly to dermatologists for distribution to patients at the point of prescribing. Furthermore, a preferred pharmacy arrangement between manufacturer Valeant and Walgreens circumvented payor strategies aimed at enhancing cost management through the use of mail service pharmacies where co-pay cards are typically not accepted. Jublia posted a trend rate of 948 percent in 2015 and contributed significantly to a nearly 10 percent drop in GDR in the antifungals. Meanwhile, British treatment guidelines for onychomycosis recommend Lamisil, an over-the-counter product in the United States, as treatment of choice. Compared to Jublia, British researchers cited Lamisil for greater efficacy and a shorter duration of treatment.1

There’s More to Dermatologicals than Antifungals

Jublia is the major factor in the high trend in this category, but payors also face other challenges:

Movement to higher priced products, and not just in the antifungals. Products such as Absorica and Veltin gained share in the acne sub-class. These products are heavily promoted and cost hundreds of dollars per month. Among acne products, gross costs PMPM rose from $1.24 in 2014 to $1.51 in 2015. Generics represent a 68 percent savings within this class.

Increased use of specialty products as more drugs are approved to treat psoriasis. A specialty product that was approved for psoriasis in 2013, Stelara was the top drug by PMPM spend in the entire dermatologic category. Cosentyx, another specialty product approved to treat psoriasis in early 2015, was also among the top 20 dermatology drugs. Cosentyx targets a specific protein in the immune system, a new mechanism of action. Other manufacturers have similar products in the pipeline, but for the time being Cosentyx is one-of-a-kind, without competitors, and it’s gaining utlizers.

Isolated examples of generic inflation. Generics continue to offer great value and cost management, but for selected medications, price inflation has translated a generic into a trend driver. In 2015, average wholesale price (AWP) inflation topped 55 percent for the corticosteroid clobetasol, pushing trend for the sub-class over 26 percent.

Want to learn more about this and other categories driving prescription drug spend? Ask Us

Top 5 Dermatologic Sub-Classes Represent 76.6 percent of category spend

Top sub-classes included acne products, topical cortecosteroids, antipsoriatics, topical antifungals & local anesthetics

Trend, cost and other analysis based on the 2015 CVS Caremark trend cohort.
PMPM per member per month, GDR generic dispensing rate, AWP average wholesale price
 

Key Points About the Top Five

  • Represent 76.6% of category spend.
  • Double-digit or greater trend in four out of the five sub-classes.
  • Triple-digit trend for the antifungals, the sub-class that includes Jublia.
  • Declining utilization of generics in four out of five sub-classes, and in the category as a whole.
    Category GDR declined from 81.6 percent in 2014 to 80.1 percent in 2015. This is unusual in the current landscape; in most categories, it is brand utilization that is declining.
  • Despite this decline, generic utilization remains a key cost management strategy in this category.

  • Represent 76.6% of category spend.
  • Double-digit or greater trend in four out of the five sub-classes.
  • Triple-digit trend for the antifungals, the sub-class that includes Jublia.
  • Declining utilization of generics in four out of five sub-classes, and in the category as a whole.
    Category GDR declined from 81.6 percent in 2014 to 80.1 percent in 2015. This is unusual in the current landscape; in most categories, it is brand utilization that is declining.
  • Despite this decline, generic utilization remains a key cost management strategy in this category.

Blunting the Spike in Dermatology with Formulary

A review of performance for the dermatological category bears out the value of careful formulary strategies. Our most selective offering, Value Formulary™, delivers significant savings by driving substantial increases in generic utilization through a combination of a narrow drug list, utilization management (UM) programs, and lifestyle class controls. Our Opt-Out Standard Formulary is for clients who want the broadest coverage using a commercial template formulary. In 2015, gross PMPM costs for clients aligned with our Value Formulary settled at $4.52, with a generic dispensing rate (GDR) of 85.7 percent. Clients who aligned with the Opt-Out Standard Formulary faced gross PMPM costs nearly three dollars higher—$7.43—and had a GDR seven percentage points lower—78.5 percent. Overall costs also rose the most in the Opt-Out Standard Formulary ($2.21 PMPM).

Clients with Value Formulary and Standarf Formulary saw lower PMPM increases than those with standard opt-out formulary

Reported cost differentials and other results are averages based on analysis of actual experience by those clients who have adopted the specified program.
 

The diverse factors that are driving spend in the dermatological category complicate management. Direct-to-consumer advertising and offers of copay assistance for high-priced new products can undermine payor strategies. Price increases, including in generics, underscore the need for careful purchasing and price protection. Products that offer a new mechanism of action merit comprehensive review prior to formulary inclusion as well as a utilization management approach that aligns with payor priorities.

Recently, as part of our ongoing commitment to helping deliver the lowest net cost while improving health, we introduced Dynamic Trend Manager. Dynamic Trend Manager uses our real-time surveillance and monitoring tools to identify potential trend drivers (e.g., new costly drugs, price increases and spikes or changes in utilization, etc.) and offers new opt-in solutions or enhancements clients can apply throughout the year to their existing cost-management strategy.

Due to all the factors and concerns discussed here, we focused our first Dynamic Trend Manager solution on the dermatological category. Dermatology Management, launching now, is a utilization management package for select specialty and non-specialty dermatology drugs (such as Jublia, Stelara, Cosentyx and others) identified as key drivers of spend in the category.

This opt-in program allows clients that have aligned to our Standard Formulary to manage dermatologicals with coverage similar to that offered by our Value Formulary option. There is no additional charge to implement the Dermatology Management program.2

Dermatology Management implementations begin on April 1, 2016

Enhance Your Dermatology Management Strategy Now for 2016 – NEW Opt-in Program

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Want to learn more about the role of formulary in cost control? Ask Us
FEATURE
March 8, 2016
Executive Vice President and Chief Operating Officer, CVS Health

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Cost Management

Controlling costs is most payors’ primary concern. Our market-leading solutions help clients get ahead of trend drivers and achieve lowest net cost.

Formulary Management

A comprehensive formulary strategy is foundational to mitigating the impact of escalating drug prices, and the introduction of new high-cost therapies.

Dynamic Trend Management

CVS Health is a leader in providing innovative, proactive solutions that help to cost-effectively manage trend while still ensuring member satisfaction.

1. Br J Dermatol. 2014;171(5):937-958. Br J Dermatol. 2004; 150(3):537-44. J Am Acad Dermatol. 2013; 68(4):600-8. Lamisil prescribing information; 2015 February.

2. Note: In some instances, a contract addendum may be required. Clients will pay their contracted rate for prior authorizations, appeals and Specialty Guideline Management.

Data Source: CVS Health Enterprise Analytics

As used throughout this document, prescription drug trend (or “Drug Trend”) is the measure of growth in prescription spending per member per month (PMPM). Drug Trend calculations take into account the effects of drug price, drug utilization and the mix of branded versus generic drugs. The 2015 Drug Trend cohort includes CVS Caremark clients in the commercial segment—health plans and employers. Overall gross Drug Trend includes the effect of negotiated rebates on overall Drug Trend. Dermatological category trend does not include the effect of formulary rebates.

All of the savings and/or trend changes discussed in this Insights Feature will vary based on a variety of factors, including demographics, plan design and programs adopted by the client. Client-specific modeling available on request.

This document contains references to brand-name prescription drugs that are trademarks or registered trademarks of pharmaceutical manufacturers not affiliated with CVS Health.