Vizient drug price forecast estimates 3.29% increase in 2021 hospital drug spending
Vizient Inc. has released its July 2020 Drug Price Forecast projecting that health systems, including inpatient and non-acute environments, can expect a 3.29% increase for pharmaceutical purchases made from Jan. 1 to Dec. 31, 2021, states a press release.
The increase will be driven by both the ongoing disruption caused by COVID-19 and enduring market trends unrelated to the virus.
“The COVID-19 pandemic has had an extraordinary impact on hospitals and health systems. As a result, any increase in pricing, even a modest one, makes the challenge of economic recovery even more difficult,” said Dan Kistner, PharmD, group senior vice president, pharmacy solutions for Vizient. “The pandemic has magnified the fractures and fissures that exist within health care. As hospitals work to repair the damage done as well as build more resilient supply chains and care models, they will have to contend with higher prices at the same time.”
Although there has been uncertainty in many aspects of drug utilization during COVID-19, upward industry trends, such as very high prices for novel treatments (e.g. gene therapies and immunotherapy for cancer) and routine price increases for frequently prescribed medications (i.e. adalimumab), have maintained a level of continuity. Pediatric pharmaceutical costs are also rising as a result of the targeting of rare diseases that require specialty or orphan drugs. Fortunately, the continued introduction of generic medications and an expanding catalog of available biosimilars are serving to blunt some of the impact of price increases on hospital budgets.
Kistner also noted the need for robust systems to manage both non-acute and critical care needs in consideration of the global pandemic. “For the past several decades, the overall focus of health care has been on migrating care to non-acute settings, which has been seen by health systems’ investment focus in areas such as specialty and retail pharmacy services. While that is important, the COVID-19 pandemic and the increase of patients who require invasive intensive care has reframed the relevance and importance of acute care capacity.”
Highlights from the forecast report include:
· Top 10 COVID-19 medications see combined spend increase of $200 million. Over the course of two months, March and April of 2020, drugs associated with COVID-19 patients showed a considerable increase in spend, as compared to that same time period in 2019. For example, hydroxychloroquine, a previous treatment option for COVID-19, experienced a 1,132% increase in spend during that time frame. Each of these 10 drugs experienced an increase of over $5 million in acute care spend with a combined total reaching $200 million.
· Pediatric pharmaceutical spending will continue to rise. Driven by the targeting of rare diseases that require specialty or orphan drugs, Vizient forecasts the spending for pediatric pharmaceuticals to increase by 3.16%. Due to the costs of the novel therapies and drug shortage challenges, hospitals have had to seek out alternative treatments, further impacting their expenditures. In addition, the pediatrics market could be heavily affected by the delays and suspensions of clinical trials during the pandemic, thus challenging the care of this vulnerable patient population.
· Specialty drugs continue to drive price increases. Vizient projects a 4.47% inflation rate for specialty drugs in addition to an ongoing surge in demand for specialty pharmaceuticals during the pandemic. This rate is much higher than both the general drug inflation rate predicted for 2021, as well as our most recent projection of 3.36% for the July 1, 2020 – June 30, 2021 time frame.
· The biosimilar effect continues to take hold. While the launch of competitive products has taken longer, biosimilars for rituximab, bevacizumab and trastuzumab are increasingly eroding the financial impact of their branded counterparts. Vizient notes that while no applications have yet been filed, bringing insulins under regulation as biologics creates the opportunity for the approval of interchangeable versions of these commonly used products.
· Home infusion therapies are anticipated to increase during the pandemic. At the height of the initial surge of the pandemic, ambulatory infusion centers were reporting an average decrease in new patient visits by 24%. During that time, the Centers for Medicare & Medicaid Services temporarily relaxed provisions for home infusion therapy services. Due to its success, Vizient anticipates continued and increased interest in home infusion care, including for oncology products, though the extent of this service remains controversial.
· Spending for vaccines decreased substantially in March and April of 2020. Comparing year-over-year data for the first two months of the COVID outbreak, spending on the top 10 vaccines decreased. For example, spend for meningococcal group B vaccine decreased 49% and the measles, mumps and rubella vaccine (live) was down 56%. It is unknown what the long-term clinical and financial impact will be for patients who may now be more susceptible to preventable diseases.
“The pharmacy landscape continues to be extremely complex — regulatory issues, financial pressures and clinical requirements. Given the dramatic changes that clinicians have experienced, it is clear we must drastically alter our approach to practice,” said Kistner. “Certainly, we need new and proven treatments and vaccines for COVID-19, however we must also address the weaknesses of the pharmaceutical supply chain that are being exacerbated by the pandemic.”
Vizient conducts the pricing analysis biannually to provide insight on factors driving pricing and practice changes in the pharmaceutical industry.
