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© 2019 Vizient, Inc. All rights reserved. July 2019 Drug Price Forecast 2

Table of contents Executive summary.................................................................................................................................................................... 3

Hot topics impacting drug prices ............................................................................................................................................. 5

The summer of biosimilars? .................................................................................................................................................. 5

Brand vs. Generics: understanding and managing effective reimbursement ........................................................................ 6

When reimbursement is not an option ................................................................................................................................... 7

Vizient is committed to mitigating drug shortages ................................................................................................................. 8

How will changes to United States Pharmacopeia standards affect cost? .......................................................................... 10

Forecast preparation, process and assumptions ................................................................................................................. 11

A closer look by segment ........................................................................................................................................................ 13

Acute care ............................................................................................................................................................................ 13

Non-acute/alternate site care ............................................................................................................................................... 13

Introducing Specialty pharmaceuticals ................................................................................................................................. 15

Pediatrics ............................................................................................................................................................................. 17

Key therapeutic class summaries........................................................................................................................................... 20

Oncology .............................................................................................................................................................................. 20

Infectious disease agents ..................................................................................................................................................... 25

Immunomodulators and disease-modifying therapies .......................................................................................................... 31

Plasma critical care products: IgIV and albumin ................................................................................................................... 32

Budget tools and resources .................................................................................................................................................... 34

How close were we? Reviewing the accuracy of the Drug Price Forecast projections ......................................................... 34

Contributors ............................................................................................................................................................................. 36


Executive summary The July 2019 Vizient Drug Price Forecast is our best estimate of the change in the cost of pharmaceuticals that participants in the Vizient Pharmacy Program will be purchasing between Jan. 1-Dec. 31, 2020. The forecast focuses on pharmaceutical products used across multiple health-system settings, including inpatient and non-acute environments, and provides a year-over-year estimate of the expected price change.

Vizient overall drug price inflation number for existing drugs and for pediatric drugs (based on Children’s Hospital Association) are represented below in Table 1. Price change predictions for contract and noncontract product segments are shown in Table 2.

Table 1. Summary of projected drug price inflation

Total weighted average drug price inflation estimate 4.57

Children’s Hospital Association inflation

Total weighted average drug price inflation estimate 3.35

Estimates based on Vizient member data.

Reasons for drug price inflation

The July 2019 drug price inflation estimate is slightly increased over January 2019 (4.28%). In addition to price changes, the American Journal of Health-System Pharmacy advises that other factors — such as volume changes and new product introductions — must be considered when preparing a drug budget.1 According to a July 2018 article, volume and mix decreased 5% in nonfederal hospitals in calendar year 2017, but increased 4.6% in clinics (including both physician offices and outpatient clinics).1 In addition, the introduction of new products accounted for 2.8% of expenditure growth for nonfederal hospitals and 5.3% of growth for clinics during the same time frame.1 Both sets of statistics reveal the increasing influence the expansion of non-acute care continues to have on health-system practice and expense. Table 3 shows the therapeutic classes that account for the most spend among Vizient members.

While this year’s projection shows moderate growth, even this growth rate is substantial. The Vizient membership currently accounts for approximately $67 billion in drug spend; applying the 4.57% price change shown in Table 1 would translate to over $3 billion in additional spend for calendar year 2020, excluding further cost increases related to new drugs and/or volume changes. Numerous specialty and other high-cost drugs for oncologic, immunologic and pediatric conditions populate the timeline of new drug approvals and will continue to impact pharmacy budgets.


Table 3. Summary of highest-spend therapeutic classes among Vizient members

Therapeutic category Key products in class Antineoplastic agents Rituxan, Keytruda, Avastin

Disease-modifying antirheumatic agents Remicade, Humira, Enbrel

Immunomodulatory agents Ocrevus, Tecfidera, Gilenya

Anti-infectives

Hepatitis C Harvoni, Epclusa, Mavyret

HIV Genvoya, Triumeq, Truvada

Antibacterials/antifungals (systemic) Daptomycin, Invanz, AmBisome

Plasma critical care

Immune globulin, intravenous Gamunex, Privigen, Gammagard

Albumin AlbuRx, Albutein, Flexbumin

Hematopoietic agents Neulasta, Aranesp, Procrit

Vaccines Prevnar, Gardasil, Pneumovax

Vizient member data for April 2018 to March 2019.

Abbreviation: HIV = human immunodeficiency virus. Table 4 shows the 10 drugs with the highest total spend for Vizient members. Table 5 shows the drugs with the largest projected increases in member spend due to price growth.

Rank Drug (brand name)

1 Adalimumab (Humira)

2 Infliximab (Remicade)a

3 Rituximab (Rituxan)a

4 Etanercept (Enbrel)

5 Pegfilgrastim (Neulasta)a

6 Pembrolizumab (Keytruda)

7 Ustekinumab (Stelara)

8 Nivolumab (Opdivo)

9 Alteplase (Activase, Cathflo Activase)

10 Denosumab (Prolia, Xgeva)

Rank Drug (brand name) 1 Adalimumab (Humira)


3 Infliximab (Remicade)


5 Rituximab (Rituxan)

6 Tofacitinib citrate (Xeljanz)

7 Denosumab (Prolia. Xgeva)

8 Vasopressin (Vasostrict)

9 Teriparatide (Forteo)

10 Secukinumab (Cosentyx)

Vizient member data for April 2018 to March 2019. aBiosimilar currently available or expected in 2019

Table 4. Top 10 drugs by total spend among Vizient members

Table 5. Top 10 drugs by size of projected price increase

1. Schumock GT, Stubbings J, Wiest MD, et al. National trends in prescription drug expenditures and projections for 2018. Am J Health Syst Pharm. 2018;75(14):1023-1038.


Hot topics impacting drug prices

The summer of biosimilars? • Numerous biologic agents — particularly those used to treat cancer and related conditions as well as

disease-modifying agents — still dominate member organizations’ spend. The acceptance and adoption of biosimilars to combat the costs of these therapies is therefore critical.

• As of July 2019, the FDA has approved 22 biosimilars, with seven available in the market.1,2 However, the composition of the U.S. biosimilars market could change dramatically in the very near future. Table 6 lists the biosimilars approved in the U.S.

• The most relevant patents protecting rituximab, bevacizumab and trastuzumab could all expire during the third quarter of 2019.3 These biologics presently account for over $10 billion in spend across the U.S. health care system.2

Vizient action steps:

• In response to the anticipated expirations, Vizient has assembled a biosimilars task force to create clinical, analytical and educational resources that can be used to help members evaluate these products for formulary inclusion as soon as they enter the market. Vizient continues to advise potential suppliers about the strategies they must implement to surmount any barriers that could limit uptake, including negative payer formulary decisions related to biosimilars. The recent finalization of the FDA’s interchangeability guidance and the upcoming plans to transition from regulating insulins as drugs to licensing them as biologics (opening the door to biosimilar competition) are indicators that commitment to the biosimilar market is required.4,5

• Vizient has established a new biosimilars resource page accessible to members that includes all evidence-based clinical resources aggregated in one location. This includes member policies and procedures, presentations and a soon-to-be-launched financial evaluation tool so that each member can assess the impact from both a cost and reimbursement standpoint for different biosimilar strategies.

• Vizient pharmacy consulting team and pharmacy aggregation networks are ensuring that biosimilars are a central part of all medication use improvement strategies in 2019.

1. Biosimilar product information. FDA website. https://www.fda.gov/drugs/biosimilars/biosimilar-product-information. Accessed May 20, 2019.

2. IQVIA SMART [database online]. Durham, NC: IQVIA; 2019. https://customerportal.imshealth.com/sites/imsportal. Accessed May 20, 2019.

3. IPD Analytics Biologics/Biosimilars database [database online]. Bay Harbor Island, FL: IPD Analytics; 2019. https://www.ipdanalytics.com/. Accessed May 20, 2019.

4. FDA guidance document. Considerations in demonstrating interchangeability with a reference product guidance for industry. Food & Drug Administration website. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/considerations-demonstrating-interchangeability-reference-product-guidance-industry. Accessed May 20, 2019.

5. FDA guidance document. Interpretation of the “deemed to be a license” provision of the Biologics Price Competition and Innovation Act of 2009. Food & Drug Administration website. https://www.fda.gov/regulatory-information/search-fda-guidance-documents/interpretation-deemed-be-license-provision-biologics-price-competition-and-innovation-act-2009. Accessed May 20, 2019.

https://www.fda.gov/drugs/biosimilars/biosimilar-product-information

https://customerportal.imshealth.com/sites/imsportal

https://www.ipdanalytics.com/

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/considerations-demonstrating-interchangeability-reference-product-guidance-industry

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/considerations-demonstrating-interchangeability-reference-product-guidance-industry

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/interpretation-deemed-be-license-provision-biologics-price-competition-and-innovation-act-2009

https://www.fda.gov/regulatory-information/search-fda-guidance-documents/interpretation-deemed-be-license-provision-biologics-price-competition-and-innovation-act-2009


Table 6. Biosimilars approved in the U.S. as of July 2019

Product (brand name) Manufacturer Date approved Date marketed Filgrastim-sndz (Zarxio) Sandoz Mar 6, 2015 Sep 3, 2015 Infliximab-dyyb (Inflectra) Celltrion/Pfizer Apr 5, 2016 Nov 2016 Etanercept-szzs (Erelzi) Sandoz Aug 30, 2016 Not yet marketed Adalimumab-atto (Amjevita) Amgen Sep 23, 2016 Not yet marketed Infliximab-abda (Renflexis) Samsung/Merck Apr 21, 2017 Jul 24, 2017 Adalimumab-adbm (Cyltezo) Boehringer Ingelheim Aug 5, 2017 Not yet marketed Bevacizumab-awwb (Mvasi) Amgen/Allergan Sep 14, 2017 Not yet marketed Trastuzumab-dkst (Ogivri) Mylan Dec 1, 2017 Not yet marketed Infliximab-qbtx (Ixifi) Pfizer Dec 13, 2017 Not yet marketed Epoetin alfa-epbx (Retacrit) Pfizer May 15, 2018 Dec 2018 Pegfilgrastim-jmdb (Fulphila) Mylan Jun 4, 2018 Jul 2018 Filgrastim-aafi (Nivestym) Pfizer Jul 20, 2018 Oct 2018 Adalimumab-adaz (Hyrimoz) Sandoz Oct 30, 2018 Not yet marketed Pegfilgrastim-cbqv (Udenyca) Coherus Biosciences Nov 2, 2018 Jan 3, 2019 Rituximab-abbs (Truxima) Celltrion/Teva Pharmaceuticals Nov 28, 2018 Not yet marketed Trastuzumab-pkrb (Herzuma) Celltrion/Teva Pharmaceuticals Dec 14, 2018 Not yet marketed Trastuzumab-dttb (Ontruzant) Samsung Bioepis Jan 18, 2019 Not yet marketed Trastuzumab-qyyp (Trazimera) Pfizer Mar 11, 2019 Not yet marketed Etanercept-ykro (Eticovo) Samsung Bioepis Apr 25, 2019 Not yet marketed Trastuzumab (ABP 980) (Kanjinti) Amgen/Allergan Jun 13, 2019 Not yet marketed Bevacizumab-bvzr (Zirabev) Pfizer Jun 27, 2019 Not yet marketed

Data derived from the Food & Drug Administration website.6

Available in the complete Drug Price Forecast July 2019 edition for Vizient Pharmacy Program participants:

• Biosimilar pipeline developments

• Insights into biosimilar adoption

Brand vs. Generics: understanding and managing effective reimbursement

• New to this iteration of the Drug Price Forecast is the breakout of drug price inflation rates by branded and generic products, as shown in Table 2.

• Definitions of brand and generic products were adapted from Medi-Span Price Rx multisource codes.1 Branded products were defined as those that have not yet undergone loss of exclusivity and that are available from a single supplier (e.g., Levemir, Atripla and Keytruda), as well as products that are co-licensed and available from multiple suppliers (e.g., Procrit/Epogen and authorized generics such as Ventolin [albuterol]). Biosimilars such as Zarxio and Udenyca were also considered branded products in this


analysis. Generic products were defined as those that have undergone loss of exclusivity and may be available from multiple suppliers (e.g., Cubicin [daptomycin], Valcyte [valganciclovir] and heparin).

• The slight downward trend in generic drug pricing is likely due to market pressure from multiple suppliers. Generic products that will likely experience price increases are those that have effectively become single-source due to factors such as drug shortages or suppliers pulling out of the market. Branded pharmaceuticals make up the bulk of member spend and will incur the most additional cost due to widespread price increases.

• The top medications that constitute the majority of spend for members all have separate reimbursement opportunities available. Any limitations in the efficiency or accuracy of reimbursement processes could have extremely negative consequences for pharmacy services.

Vizient action steps:

• Through our consulting services, Vizient can help members improve their revenue integrity processes and ensure outpatient economic monitoring activities are functioning properly. In addition, our Acentrus Specialty™ pharmacy solution continues to help members gain access to limited distribution drugs, thus minimizing impediments to revenue opportunities.

1. Medi-Span Price Rx [database online]. Hudson, OH: Wolters Kluwer; 2018. https://pricerx.medispan.com. Accessed May 20, 2019.

When reimbursement is not an option • In an era of bundled payments, medication cost management is necessary for hospitals to manage

overall budgets. For many hospitals, efforts to manage drug spend have focused on drugs that are considerably more expensive than alternatives and for which the incremental value is undetermined or controversial.

• Alternative agents with separate reimbursement opportunities are available for many member organizations’ most expensive medications. However, this is not the case for a number of drugs used primarily in the inpatient setting. Three such agents include vasopressin, injectable acetaminophen and a version of alteplase intended for catheter clearance.

• For some of these drugs, however, upcoming competition is finally in sight. Intravenous (IV) acetaminophen, for example, could see generic versions by the end of 2020.1 In other cases, members must maintain an open dialogue with physicians to monitor the ways in which these drugs are used and ensure that they are being prescribed cost-effectively.

Vizient action steps

• The Vizient clinical consulting services and suite of analytics, including our Clinical Data Base, are all tools that the our Center for Pharmacy Practice Excellence and our member-driven Pharmacy Clinical Council, have focused studies on to address the budget impact of these drugs and deliver high-quality, cost-effective care through the use of clinical and contracting resources.


https://pricerx.medispan.com/




• Summary review medication management for:

– IV acetaminophen

– Liposomal bupivacaine

– Andexanet alfa

Vizient is committed to mitigating drug shortages • According to the University of Utah Drug Information Service, 2018 saw over 300 active drug shortages.1

Of these, 55% were injectable medications. Central nervous system agents, which include opioids, topped the list of shortages by class, followed by antimicrobials and cardiovascular products.

• The most common cause of drug shortages — quality and manufacturing issues — remains largely unchanged from year to year. According to the FDA, such problems are the cause of nearly two-thirds (64%) of drug shortages.2 (In contrast, the University of Utah records that the cause of shortages is “unknown” in 53% of reports, as this information is not publicly available.1)

• Manufacturing issues disproportionately affect high-volume, low-profit injectable products because the current market differentiates these products based on cost, not on other attributes such as quality. As a result, manufacturers have an incentive to keep production costs down, which translates to low investment in improving production facilities and equipment or quality control testing and oversight. This market approach, combined with the ongoing consolidation of manufacturers, results in limited investment in acute care-focused pharmaceuticals. In addition, a highly concentrated market for generic sterile injectables has created a supply chain in which disruption of a single production line can cause a drug shortage crisis.3

• Drug shortages compromise patient care and contribute to higher costs, both direct and indirect. Vizient conducted a national survey of its members in March and April 2019 to get a contemporary assessment of how drug shortages are currently impacting our members. Approximately 365 hospitals and health systems responded, and represented a variety of hospital types and geographies. The total cost of increased labor is calculated to be a staggering $359 million, equating to over 8 million labor hours that are dedicated to managing drug shortages in U.S. hospitals. Results from the 2019 Vizient Drug Shortages Survey can be found at www.enddrugshortages.com.

• In a survey of 300 respondents conducted by the Institute for Safe Medicine Practices between August and October 2017, 21% reported that they were aware of at least one medication error related to a drug shortage occurring in the six months prior to the survey. Additionally, 47% of respondents reported that drug shortages had caused a patient to receive a less effective drug and three-quarters reported a delay in treatment caused by a shortage.4

• In January 2018, Intermountain Healthcare announced its intention to collaborate with a consortium of health systems to develop a not-for-profit generic drug company to address shortages of essential medications and combat high drug prices.5 The new company, Civica Rx, has identified 14 products that it

http://www.enddrugshortages.com/

http://www.enddrugshortages.com/


will produce either directly or through a contracted manufacturer. The first two products, daptomycin and vancomycin, will be produced through a partnership with Xellia pharmaceuticals.6


• The Novaplus private label continues to deliver industry-leading value and ensure the availability of numerous products in short supply across the industry. Our success at linking member purchasing commitment to manufacturers’ long term projections of supply result in this increased stability. As of July 2019, the Novaplus label includes over 760 NDCs and routinely demonstrates fill rates in excess of 75% for dozens of agents on the American Society of Health-System Pharmacists (ASHP) drug shortages website.7

• Vizient — in conjunction with its member Clinical Pharmacy Advisory Council — produces drug shortage mitigation strategies to share best practices on therapeutic alternatives when drugs are unavailable.

• Vizient partners with the Drug Information Service at the University of Utah to provide our members with up-to-date information on drug shortages. In addition to individualized drug shortage information alerts, the University of Utah’s “Drug Shortage Digest,” a summary of new, worsening and improving supply situations, is circulated weekly in Pharmacy Hot Info and monthly in the Pharmacy Monitor.

• Furthermore, the Vizient drug shortages management steering committee is presently working on numerous strategies dedicated to not only dealing with shortages more efficiently, but also finding additional solutions to prevent supply interruptions from occurring in the first place.

• Vizient has continued to build its relationship with the FDA to provide insights on the most meaningful actions that could bring resolution to the shortage crisis. For example, in June 2019, Vizient was able to respond directly to an FDA request regarding which drugs currently in short supply should be given highest priority for remediation based on their clinical relevance. Vizient is working with the FDA and other advocacy stakeholders to pursue global solutions to this challenge.

• We at Vizient applaud the increased national focus on drug shortages, and we have made it a priority to work toward ensuring that our member hospitals have reliable access to critical drugs.

1. University of Utah Drug Information Center. Drug shortages statistics. American Society of Health-System Pharmacists website. https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics. Accessed May 17, 2019.

2. Drug shortages infographic. Food & Drug Administration website. https://www.fda.gov/Drugs/DrugSafety/DrugShortages/ucm441579.htm. Updated August 13, 2018. Accessed May 17, 2019.

3. Woodcock J, Wosinska M. Economic and technological drivers of generic sterile injectable drug shortages. Clin Pharmacol Ther. 2013;93(2):170-176. doi:10.1038/clpt.2012.220.

4. Drug shortages continue to compromise patient care. Institute for Safe Medication Practices website. https://www.ismp.org/resources/drug-shortages-continue-compromise-patient-care. Published January 11, 2018. Accessed May 17, 2019.

5. Leading U.S. health systems announce plans to develop a not-for-profit generic drug company [press release]. Salt Lake City, UT; Intermountain Healthcare; January 18, 2018. https://intermountainhealthcare.org/news/2018/01/leading-us-health-systems-announce-plans-to-develop-a-not-for-profit-generic-drug-company. Accessed May 17, 2019.

6. Civica Rx and Xellia Pharmaceuticals join forces. Civica Rx website. https://civicarx.org/civica-rx-and-xellia-pharmaceuticals-join-forces/. Published May 14, 2019. Accessed May 17, 2019.

7. Vizient internal purchase data

https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics

https://www.fda.gov/Drugs/DrugSafety/DrugShortages/ucm441579.htm

https://www.ismp.org/resources/drug-shortages-continue-compromise-patient-care

https://intermountainhealthcare.org/news/2018/01/leading-us-health-systems-announce-plans-to-develop-a-not-for-profit-generic-drug-company/

https://intermountainhealthcare.org/news/2018/01/leading-us-health-systems-announce-plans-to-develop-a-not-for-profit-generic-drug-company/

https://civicarx.org/civica-rx-and-xellia-pharmaceuticals-join-forces/



• ASHP guidelines

• Insights into Civica and key market developments

• Private label program strategies and results

• Details into our contracting strategies and results

How will changes to United States Pharmacopeia standards affect cost? • Pharmacies will be impacted by the level of responsibility and the costs associated with ensuring

compliance be more evident than with the standards established by the United States Pharmacopeia (USP) to ensure safety and quality in medication compounding and management.

• As of Dec. 1, 2019, all organizations that prepare, manage and administer medications must adhere to the revised and aligned standards of USP <795> (nonsterile medications), USP <797> (sterile medications) and USP <800> (hazardous medications).1 In addition, a new standard for managing radiopharmaceuticals (USP <825>) will be finalized on Dec. 1, 2019.2


• For the past five years, Vizient has provided numerous educational resources to help members achieve compliance in their organizations. These tools and other references are available on the Drug Compounding and Handling page of our website.

• In addition, Vizient has updated its catalog to identify contracts and specific products that support adherence with these standards, while the Vizient pharmacy consulting team helps organizations that require additional support by providing education and ensuring standards compliance.

1. Updates on compounding standards. United States Pharmacopeia website. https://www.usp.org/compounding/updates-on-standards. Accessed May 20, 2019

2. USP General Chapter <825> radiopharmaceuticals – preparation, compounding, dispensing, and repackaging. United States Pharmacopeia website. https://www.usp.org/chemical-medicines/general-chapter-825. Accessed May 20, 2019.

Our advice Our recommendations for success remain much the same as those detailed in previous iterations of the Drug Price Forecast:

• Strategic focus on pharmacy: Vizient has consistently held that pharmacy must be treated as an essential element of any organization’s strategic plan given its impact on the cost and quality of patient care across practice environments. Whether an organization is attempting to reduce inpatient length of stay, expand medication management to include retail or specialty pharmacy, promote population health or decrease opioid abuse, pharmacy is an integral component of those efforts. This concept was articulated convincingly in the April 1, 2018, issue of the American Journal of Health-System Pharmacy, in which several articles discussed

https://www.usp.org/compounding/updates-on-standards

https://www.usp.org/chemical-medicines/general-chapter-825


the need for senior pharmacy leadership to support the concept of a “pharmacy enterprise” that effectively and efficiently extends across all sites of care.1

• Focus on advocacy: Successfully addressing the many issues confronting pharmacy requires advocacy. The recently revised 2019 Vizient Pharmacy Strategic Action Plan, developed with the members of the Vizient Pharmacy Executive Council and the Vizient Consortium Pharmacy Network Executive Committee, can serve as a resource for targeting advocacy initiatives. The Vizient pharmacy team and public policy offices are working to maximize every legislative opportunity to advance the cause of health systems and address the barriers that can hinder cost-effective care.

• Biosimilars: Now as never before, it is critically important that we focus our attention on supporting biosimilar evaluation and uptake, particularly oncology monoclonal antibodies. While uptake for other biosimilars has gradually improved, the oncology market will be the true test of whether a model that is both clinically accepted and financially viable can be sustained. Vizient recently launched its Biosimilars webpage, which details educational, clinical and analytical resources to help members evaluate the opportunities presented by biosimilars.

• Partnering with Vizient: By continuing to work together with Vizient, members will be able to anticipate the changes that influence drug spend and obtain the necessary support to mitigate these challenges. The Vizient integrated pharmacy solution continues to grow in scope and depth of service to provide sourcing opportunities, advanced analytics, consulting support, clinical resources, educational materials, thought leadership and advocacy, all of which help to address the array of issues that challenge pharmacy providers.

The pharmacy landscape continues to be extremely complex — regulatory issues, financial pressures, clinical requirements and forecast expectations must all be anticipated and managed. However, organizations that can successfully navigate these challenges will not just succeed, but thrive. Our goal, as always, is to help our members do just that.

1. Abramowitz PW, Chen DF, Cobaugh DJ. Multihospital health systems: Growing complexity of pharmacy enterprise brings opportunities and challenges. Am J Health Syst Pharm. 2018;75(7):417-418.

Forecast preparation, process and assumptions Some things to keep in mind when reviewing the Drug Price Forecast:

• The forecast presents the Vizient pharmacy team’s best estimate of likely drug price behavior during the identified period. However, it is important to recognize the uncertainty inherent in the projection process.

• This analysis was conducted using data from Vizient Pharmacy Program participants’ purchases (price and volume) in hospital and non-acute facilities. The product mix covered by this forecast is based on participants’ aggregated purchases and will differ from that of any individual facility. To help you assess your own data using the information in this forecast, figures are presented using generic names and therapeutic categories. The Vizient Drug Budget Forecast Report may also be useful to you for capturing your institution’s detailed pharmacy purchases. Contact us at [email protected] if you have questions about accessing the report.

• The products analyzed comprise the top 80% of pharmaceutical purchases (using dollars spent on a line-item basis) made through pharmacy Authorized Distributors by Vizient Pharmacy Program participants in hospital,

mailto:[email protected]


non-acute and pediatric settings from April 1, 2018, through March 30, 2019. Purchases made through the 340B program were excluded from the analysis.

• Purchasing sterile preparations from outsourced compounders is a sizeable expense for many health systems. This forecast does not analyze these purchases as they are not reported by our Authorized Distributors. If your facility uses outsourced compounding services, remember to factor those purchases into your budget plans. Vizient has noted regular price increases from our contracted suppliers in this area and we believe that this trend will continue.

• Vizient uses price change history for the last 36 months (where available), as well as experience and knowledge of current contract allowances and marketplace factors such as expiring patents and anticipated new competition, to develop an inflation estimate for each line item in the projection. The analysis does not take into account other market dynamics such as raw material scarcity and finished goods supply shortages.

• Information on possible patent expirations is provided solely as a courtesy and is based on sources available at the time of publication; actual expiration dates can change because of patent challenges and litigation processes. There is also no guarantee that an approved generic product will be ready to enter the market by the expiration date. Manufacturers also may file a request for exclusive marketing rights with the FDA for periods ranging from 180 days to seven years depending on the category. If granted, this period of exclusivity may or may not be synchronized with the patent status and can further delay the introduction of competition into the market.

Information about new drugs in the pipeline is available by contacting us at [email protected]. Cost information is not usually available for new products until they receive FDA approval; however, health care organizations should review the literature on any new agent to determine its place in therapy for their specific patient populations and to develop guidelines for cost-effective use of new, expensive drugs.

Finally, this document is a projection of price behavior only. When preparing a drug expenditure budget, also consider changes in volume and mix for your organization and the effects of introduction and adoption of new drugs.


• Projected timeline and approvals: – New drugs approvals – Regulatory and accreditation events – Anticipated availability of new generics and biosimilars



A closer look by segment

Acute care Drug costs continue to be a significant portion of the in-patient spend.

• In some health plans, drug costs exceed inpatient hospital medical bills, accounting for a third of all spending.1 The increasing cost of medication can be attributed to the rising price of patent-protected drugs.

• Branded drug prices have increased by over 60% since 2014; among frequently prescribed specialty drugs, branded drug costs have risen by 57%.2

• Generic drug prices have also increased due to less competition among manufacturers in this space.

• Frequent and extended drug shortages increase drug spending on off-contract and alternative medications.

Table 7. Acute care drugs with the highest share of spend among Vizient members

Drug

Rituximab Infliximab

Pegfilgrastim Bevacizumab

Alteplase Trastuzumab

Pembrolizumab Immune globulin, gamma (IgG)/Proline/IgA 0-50 mcg/mL

Nivolumab Ocrelizumab

Vizient member data on inpatient spend from April 2018 through March 2019.

1. Hancock J. Do pharma’s claims on drug prices pass the smell test? We found 5 stinkers. Kaiser Health News website. https://khn.org/news/do-pharmas-claims-on-drug-prices-pass-the-smell-test-we-found-5-stinkers/. Published October 2, 2017. Accessed May 19, 2019.

2. 2018 drug trend report. Express Scripts website. https://lab.express-scripts.com/lab/drug-trend-report/2018-drug-trend-report. Accessed May 19, 2019.

Non-acute/alternate site care The ability to deliver high-quality, cost-effective care outside of an inpatient hospital setting continues to be an area of focus, given the need to find the least expensive location of treatment.1

• Drug shortages continue to be a challenge for the alternate site setting, especially for agents used in the outpatient infusion and home health setting (e.g., injectable drugs). Antimicrobials, electrolytes, nutrition-related agents and IV fluids continue to be affected by supply issues.2

• Pharmacy providers with multiple sites of care are tasked with the meeting the requirements for safe compounding of sterile and hazardous pharmaceuticals established in the USP general chapters <797> and <800> by the enforcement date of Dec. 1, 2019.3

https://khn.org/news/do-pharmas-claims-on-drug-prices-pass-the-smell-test-we-found-5-stinkers/

https://lab.express-scripts.com/lab/drug-trend-report/2018-drug-trend-report


• Alternate site pharmacy practices face escalating drug expenditures, and continued efforts must be made to drive additional uptake for biosimilars, particularly for drugs such as infliximab, where competition already exists, and for products such as rituximab, where competition is anticipated .4,5

Table 8. Top 10 drugs based on non-acute spend among Vizient members

Rank Drug (brand name)

1 Adalimumab (Humira)


3 Infliximab (Remicade)


5 Denosumab (Prolia)

6 Secukinumab (Cosentyx)

7 Rituximab (Rituxan)

8 Erenumab-aooe (Aimovig)

9 Somatropin (Omnitrope, Nutropin AQ, Genotropin, Norditropin)

10 Ledipasvir/sofosbuvir (Harvoni)

Vizient member data for April 2018 through March 2019.3

• For alternate site payers, industry consolidation among pharmacy services administrative organizations (PSAO) through the big three wholesale distributors impacts the economic viability of pharmacies.

• The consolidation of pharmacy benefit managers (PBMs) has resulted in an increasing level of influence given their size, affecting the extent to which pharmacies are reimbursed for their services.6

• Vizient anticipates that key aspects of the PBM industry will continue to be scrutinized, including the management of revenue through avenues such as direct and indirect remuneration fees.6,7 All participants in the health care arena will be expected to provide increased transparency regarding how their actions translate into lower costs and better outcomes while continuing to drive higher revenues for their organizations.

1. Magellan Rx Management. 2018 Employer Market Insights Report. 1st ed. https://www1.magellanrx.com/publications/employer-market-insights-report/. Accessed May 21, 2019.

2. University of Utah Drug Information Services. Drug shortages statistics. American Society of Health-System Pharmacists website. https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics. Accessed May 21, 2019.

3. Updates on compounding standards. United States Pharmacopeia website. https://www.usp.org/compounding/updates-on-standards. Accessed May 20, 2019.

4. Biosimilar product information. Food & Drug Administration website. https://www.fda.gov/drugs/biosimilars/biosimilar-product-information. Accessed May 20, 2019.


6. Seeley E, Kesselheim AS. Pharmacy benefit managers: practices, controversies, and what lies ahead. https://www.commonwealthfund.org/publications/issue-briefs/2019/mar/pharmacy-benefit-managers-practices-controversies-what-lies-ahead. Published March 26, 2019. Accessed June 11, 2019.

7. Anderson GF, Bai G. Reforming direct and indirect remuneration in Medicare Part D. https://www.healthaffairs.org/do/10.1377/hblog20190215.708286/full/. Published February 19, 2019. Accessed June 11, 2019.

https://www1.magellanrx.com/publications/employer-market-insights-report/

https://www1.magellanrx.com/publications/employer-market-insights-report/

https://www.ashp.org/Drug-Shortages/Shortage-Resources/Drug-Shortages-Statistics

https://www.usp.org/compounding/updates-on-standards

https://www.fda.gov/drugs/biosimilars/biosimilar-product-information


https://www.commonwealthfund.org/publications/issue-briefs/2019/mar/pharmacy-benefit-managers-practices-controversies-what-lies-ahead

https://www.commonwealthfund.org/publications/issue-briefs/2019/mar/pharmacy-benefit-managers-practices-controversies-what-lies-ahead

https://www.healthaffairs.org/do/10.1377/hblog20190215.708286/full/


NEW! Specialty pharmaceuticals Specialty pharmaceuticals inflation rate: 4.23%

Specialty projections, Jan. 1, 2020-Dec. 31, 2020

• The breakout of specialty drug price inflation rates by branded and generic products resulted in an average 4.23% predicted price inflation. Overall, the total specialty inflation rate (Table 9) is similar to the general drug inflation rate of 4.57% predicted for the 2020 time period. However, since dollar prices of specialty drugs tend to outweigh prices for nonspecialty medications, this inflation rate will likely result in the need to increase their drug budgets.

• For this projection, Vizient included drugs on limited distribution lists that either have an orphan designation or would cost at least $4,000 per patient per month. Using these criteria, our analysis included 108 unique drugs and 270 NDCs. The majority of specialty drugs included in this analysis are noncontract for Vizient members. Furthermore, we subdivided the line items into biologic and nonbiologic categories based on the type of FDA approval the drug received.

Table 9. Estimated specialty drug price inflation ratesa

Vizient predicted price change, %

Biologics 4.57

Nonbiologics 3.87

Total weighted average drug price inflation estimate

4.23

a Estimates based on Acentrus Specialty data.

• Across every dimension of care, the cost, use, clinical impact and financial considerations associated with specialty drugs are continually increasing. In 2018, 5.8 billion prescriptions were dispensed in the U.S., up 2.7% compared with 2017.1 Although specialty pharmaceuticals represented only 2.2% of those prescriptions1, their growth rate was 5.7% in 2017, over twice that of traditional medications.1 Furthermore, specialty medications have grown at a 4.2% compound annual growth rate since 2013.1 Table 10 illustrates these increases by comparing the number of dispensed prescriptions in 2013 versus 2018.

• Given that the drug pipeline is heavily dominated by specialty drugs (Table11) 2, health systems must ensure they have effective strategies in place to compete within this landscape to promote prescription capture and therapy adherence, and preserve continuity of care.

• Hospitals and health systems must devote attention and resources to ensure they understand and can effectively manage the prescribing, monitoring and reimbursement associated with these agents.


Table 10. Growth in adjusted dispensed prescriptions in 2013 and 2018

Therapeutic category Percent growth

Oncology 19

Multiple sclerosis 3

HIV 5

Autoimmune diseasesa 55

Viral hepatitis 18

Data derived from IQVIA Institute website.1 a Autoimmune diseases include rheumatoid arthritis, psoriasis, psoriatic arthritis, Crohn’s disease, ulcerative colitis and ankylosing spondylitis.

Abbreviation: HIV = human immunodeficiency virus.

Expanding the role of health system-based specialty pharmacy

• Since 2015, the number of specialty pharmacies owned by hospitals, health systems, physician practices and providers’ group purchasing organizations (GPOs) that have achieved accreditation status have grown from 11% to 27% in 2018.3 A separate analysis projects this percentage will increase to 85% in 2022.4

Generics and biosimilars in specialty pharmacy, 2019 to 2023

• 2019 will be a seminal year for biosimilars, as competing versions of monoclonal antibodies commonly used in oncology, such as rituximab, bevacizumab and trastuzumab, are expected to enter the market.5 In addition, we now have multiple competitors for products such as pegfilgrastim.5 These four molecules alone account for approximately $14 billion in spend over 12 months.6 Specialty pharmacy providers should work to encourage acceptance of biosimilars as comparable therapeutic alternatives.

Table 12. Anticipated dates of introduction for adalimumab biosimilars

Supplier Drug (brand name) Approval date Settlement-allowed launch date

Amgen Adalimumab-atto (Amjevita) Sep 23, 2016 Jan 31, 2023

Merck/Samsung SB5 Jul 2019 (estimated) Jun 30, 2023

Mylan MYL-1401A Not filed Jul 31, 2023

Sandoz Adalimumab-adaz (Hyrmioz) Oct 30, 2018 Sep 30, 2023

Momenta M923 Not filed Nov 20, 2023

Boehringer Ingelheim Adalimumab-adbm (Cyltezo) Aug 5, 2017 Jul 1, 2023

Data derived from Health Industries Research website and the Center for Biosimilars website.7

• Between 2019 and 2023, numerous small molecule generics such as adalimumab (Table 12) are

expected to enter the market for a wide array of specialty categories that presently account for over $24 billion in spend.5,6 Whether it is new molecules, biosimilars or generics, specialty pharmacy remains a


discipline all member organizations must master either directly or through partnership with other organizations.

Acentrus Specialty update

Acentrus Specialty, the singular solution for specialty pharmacy for Vizient, is making great progress in building its membership of health system–based specialty pharmacies, which now consists of 74 clients including academic medical centers, integrated delivery networks and community-based hospitals from various GPOs. Membership is expected to reach 90 health systems by the end of 2019.

Acentrus’ mission remains to support the success of health systems as the most appropriate and effective providers of integrated specialty pharmacy care through a comprehensive portfolio of solutions that enable health systems to build and expand their specialty capabilities in order to provide superior continuity of care to the local patients they serve. The portfolio continues to grow, adding core products and services to support Acentrus’ mission.

1. Medicine use and spending in the U.S. A review of 2018 and outlook to 2023. IQVIA Institute website. https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-a-review-of-2018-and-outlook-to-2023. Published May 9, 2019. Accessed May 21, 2019.

2. MRx Pipeline. A view into upcoming specialty and traditional drugs. MagellanRx Management website. https://www1.magellanrx.com/publications/mrx-pipeline. Published January 2019. Accessed May 21, 2019.

3. Fein AJ. The specialty pharmacy boom: Our exclusive update on the U.S. market. https://www.drugchannels.net/2019/04/the-specialty-pharmacy-boom-our.html. Published April 23, 2019. Accessed May 21, 2019.

4. Integrated delivery networks: market landscape and strategic imperatives. Health Industries Research website. https://www.hirc.com/integrated-delivery-networks-market-landscape-and-strategic-imperatives. Accessed May 21, 2019.


6. IQVIA SMART [database online]. Durham, NC: IQVIA; 2019. https://customerportal.imshealth.com/sites/imsportal. Accessed May 20, 2019.

7. AbbVie and Boehringer Ingelheim settle over biosimilar adalimumab. The Center for Biosimilars website. https://www.centerforbiosimilars.com/news/abbvie-and-boehringer-ingelheim-settle-over-biosimilar-adalimumab. Published May 14, 2019. Accessed May 21, 2019.

Pediatrics Pediatric inflation rate: 3.35%

Recent approvals

• In early 2019, approvals of drugs for the pediatric population remained focused in three categories: specialty drugs, gene therapy and chimeric antigen receptor T-cell treatments. To alleviate the burden they impose, additional evaluations must be made before including these medications for rare diseases in hospital formularies. Value-based approaches include evaluating quality-adjusted life year (QALY), outcomes-based payments and indication-based pricing.1

• The following high-cost drugs were approved for pediatric indications:

Amifampridine (Ruzurgi; Jacobus) was approved in May 2019 for the treatment of Lambert-Eaton myasthenic syndrome (LEMS) in patients 6-17 years of age. 2

Dupilumab (Dupixent; Regeneron) received an expansion of indications in October 2018 as an add-on treatment for patients 12 years of age and older for moderate-to-severe eosinophilic or oral corticosteroid-dependent asthma.3

https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-a-review-of-2018-and-outlook-to-2023

https://www1.magellanrx.com/publications/mrx-pipeline

https://www.drugchannels.net/2019/04/the-specialty-pharmacy-boom-our.html

https://www.drugchannels.net/2019/04/the-specialty-pharmacy-boom-our.html

https://www.hirc.com/integrated-delivery-networks-market-landscape-and-strategic-imperatives



https://www.centerforbiosimilars.com/news/abbvie-and-boehringer-ingelheim-settle-over-biosimilar-adalimumab


Turoctocog alfa pegol (Esperoct; Novo Nordisk), an extended half-life factor VIII molecule, was approved in February 2019, although Novo does not expect to launch Esperoct until 2020. Economic trends show an increase in the cost of treatment despite the reduction in dosing days: standard half-life factor treatments average $4,000/patient, while extended half-life factor treatments average $9,000/patient.4

In late September 2018, cannabidiol medications were given a Schedule 5 designation, allowing GW Pharmaceuticals to manufacture its epilepsy medication cannabidiol (Epidiolex). The annual cost is expected to be about $32,500 per year.5

In May 2019, Onasemnogene abeparvovec-xioi (Zolgensma/AVXS-101; AveXis) — a gene therapy used to treat spinal muscular atrophy with bi-allelic mutations in the survival motor neuron 1 (SMN1) — was approved by the FDA.6 The $2.12 million cost is based on QALY, and AveXis has presented a mortgage-based pricing structure in which payments can be made over five years, with installments of $425,000 per year.7

Cost increases driven by specialty drugs, outpatient care

• As in other areas, pediatric pharmaceutical costs are rising as a result of the targeting of rare diseases that require specialty or orphan drugs.

• Table 13 lists the top 10 drugs based on total expenditures among self-governed children’s hospitals, as well as the drug’s ranking from the January 2019 Drug Price Forecast and based on overall spend among Vizient members for April 1, 2018, through March 31, 2019.

Table 13. Top 10 pediatric drugs based on spenda among self-governed children’s hospitals that participate in the Vizient GPO

Current ranking among children’s

hospitalsb

Previous ranking among children’s

hospitalsc Generic drug name (brand name; manufacturer)

Current ranking among all Vizient

membersb

1 1 Dinutuximab (Unituxin; United Therapeutics) 78

2 2 Pegaspargase (Oncaspar; Baxalta) 52

3 3 Infliximab (Remicade; Janssen Biotech) 2

4 7 Asparaginase (Erwinaze; Jazz Pharmaceuticals) 118

5 5 Eculizumab (Solaris; Alexion) 13

6 6 Sildenafil (Revatio; Pfizer) 187

7 4 Palivizumab (Synagis; Astra Zeneca) 107

8 9 Pneumococcal 13-valent conjugate vaccine (Prevnar-13; Pfizer)

14

9 8 Dornase alfa (Pulmozyme; Genentech) 65

10 10 Pegfilgrastim (Neulasta; Amgen) 10

a 340B purchases were excluded from the analysis. b April 2018 through March 2019. c Ranking from January 2019 Drug Price Forecast based on data for September 2017 through August 2018.

Abbreviation: GPO = group purchasing organization.



• Insights into high cost CAR-T therapy and gene therapy agents impacting pediatric pharmacy budgets

• Pipeline of investigational drugs with pediatric studies ongoing

Vizientinc.com resource

Vizient pediatric program 1. Kaltenboeck A, Bach PB. Value-based pricing for drugs: theme and variations. JAMA. 2018;319(21):2165-2166. 2. Ruzurgi (amifampridine). CenterWatch website. https://www.centerwatch.com/drug-information/fda-approved-drugs/drug/100384/ruzurgi-

amifampridine. Accessed May 2019. 3. Dupixent (dupilumab) [package insert]. Tarrytown, NY: Regeneron Pharmaceuticals, Inc.; October 2018. 4. Prime Therapeutics finds costs double when switching to new extended half-life hemophilia factor products [press release]. St. Paul, MN:

Prime Therapeutics; April 20, 2018. https://www.primetherapeutics.com/en/news/pressreleases/2018/amcpposter-hemophelia-release.html. Accessed May 18, 2019.

5. FDA approves first drug comprised of an active ingredient derived from marijuana to treat rare, severe forms of epilepsy [press release]. Silver Spring, MD: Food & Drug Administration; June 25, 2018. https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm611046.htm. Accessed October 29, 2018.

6. The first SMA gene therapy in human trials. AveXis website. https://avexis.com/research-and-development. Accessed October 29, 2018. 7. Luxner L. With Zolgensma’s approval, debate shifts to pricing and availability of world’s costliest drug [press release]. Pensacola, FL:

SMA News Today. https://smanewstoday.com/2019/05/29/zolgensma-approval-shifts-debate-pricing-availability-worlds-costliest-drug/. Published May 29, 2019. Accessed June 12, 2019.

https://marketplaceprocure.com/programs/novakids-pediatric-program/

https://www.centerwatch.com/drug-information/fda-approved-drugs/drug/100384/ruzurgi-amifampridine

https://www.centerwatch.com/drug-information/fda-approved-drugs/drug/100384/ruzurgi-amifampridine

https://www.primetherapeutics.com/en/news/pressreleases/2018/amcpposter-hemophelia-release.html

https://www.primetherapeutics.com/en/news/pressreleases/2018/amcpposter-hemophelia-release.html

https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm611046.htm

https://avexis.com/research-and-development

https://smanewstoday.com/2019/05/29/zolgensma-approval-shifts-debate-pricing-availability-worlds-costliest-drug/


Key therapeutic class summaries

Oncology Period projected inflation rate: 3.88%

Increase in treatments for leukemia

• Recent advances in basic science, including the sequencing of many cancer genomes, has inspired a veritable explosion in drug development for acute myeloid leukemia (AML) and chronic lymphocytic leukemia (CLL), dramatically increasing the number of options for patients at all stages of treatment. Table 14 shows the advances in leukemia treatment over the last 60 years.

Table 14. Advances in leukemia treatment

Pre-1900 Leukemia named, characterized and classified into four basic types

1960 Cytarabine introduced to combinations for AML

1974 FDA approval of doxorubicin

1977 Chlorambucil used to slow progression of CLL

1982 Daunorubicin plus cytarabine (7+3) becomes AML standard of care

2000 Fludarabine replaces chlorambucil ± fludarabine as CLL standard of care

2008 AML genome fully sequenced

2011 Rituximab added to standard CLL treatment

2013-2018 Five new drugs for CLL: obinutuzumab, ibrutinib, idelalisib, venetoclax and duvelisib

2017-2019 Eight new drugs for AML: midostaurin, enasidenib, CPX-351, gemtuzumab ozogamicin, glasdegib, venetoclax, gilteritinib and ivosidenib

Abbreviations: AML = acute myeloid leukemia; CLL = chronic lymphocytic leukemia.


• Five new drugs that treat CLL have been introduced since 2013, replacing the previous standard of care of fludarabine with or without chlorambucil. Most of the new drugs approved are oral agents; however, these agents may still be used in combination with parenteral traditional chemotherapy.

• Eight new drugs have been approved to treat AML since 2017. Most of these new drugs are oral agents, but may be given in combination with standard parenteral therapy, particularly in the first-line setting. Many of these newly approved agents require companion diagnostic tests, a trend that will continue as drug development focuses on information gleaned from the sequencing of the AML genome, which was completed in 2008.

• While these advances promise choices and potentially improved outcomes, providers and patients will experience a financial impact due to the standard of care shifting from mostly inexpensive, generic agents to combinations of branded targeted agents. This complex stacking of traditional and targeted therapies has transcended many disease states throughout the oncology continuum.

Immunotherapy

• Immunotherapy continues to reign as the lead therapy among many of the disease categories across oncology. Checkpoint inhibitors and CAR T treatments, each a subcategory of immunotherapy agents, work to block receptors or ligand proteins that inhibit the immune system from recognizing and eliminating cancer cells. There are six PD-1 or PD-L1 drugs currently on the market.

• To discover trends in utilization between PD-1 or PD-L1 drugs and their application for indicated disease states, we used the Resource Manager tool within the Vizient Clinical Data Base (CDB), an analytic platform for performance improvement populated by hundreds of health systems and community hospitals nationwide, including nearly all academic medical centers, to retrospectively review the relationship between these agents and their use in primary oncologic disease states (Figure 1).


Figure 1. Use of PD-1 and PD-L1 drugs in oncology disease states

Data derived from Clinical Data Base for Q1 2016 to Q4 2018.

We reviewed a prolonged timeline to evaluate the change in utilization of outpatient lung cancer treatments since they were first brought to the market. Pembrolizumb has demonstrated a mostly upward utilization; conversely, nivolumab use has declined or plateaued in the lung cancer space, as shown in Figure 2. The steep rise in pembrolizumab’s use is reflected in the large Vizient total member spend as it has climbed to the second most expensive IV cancer medication.


Figure 2. Use of PD-1 and PD-L1 drugs to treat outpatient lung cancer, 2016 to 2018

Data from Vizient Clinical Data Base for Q1 2016 to Q4 2018.

CAR T

• Beginning Oct. 1, 2017, two new unique ICD-10 procedure codes were assigned to CAR T immunotherapy, enabling the procedure to be tracked in administrative datasets. The objective of the projects was to describe trends in each patient population and outcomes using the CAR T procedure codes in the CDB.

• Using Vizient cost methodology adapted from Centers for Medicare and Medicaid Services (CMS) cost reports, the median total cost of hospitalization for CAR T encounters for young adults and pediatrics was $242,730, while the median direct cost was $166,402. The highest contributor to total cost was the pharmacy service group, with a median pharmacy total cost of $167,585 (interquartile range, $12,576-$337,921).Our data analysis was conducted using 2017 CMS cost reports, which may not have included use of CAR T at all hospitals. In addition, our cost methodology has been updated since the analysis was conducted to incorporate updated CMS cost reports.

• On Feb. 15, 2019, CMS issued a proposal for a National Coverage Determination for CAR T-cell therapy for cancer. The proposal included a completion date of May 17, 2019; however, CMS released a follow-up statement that a final National Coverage Determination on CAR T-cell therapy for cancer will be forthcoming.

• Tables 15 and 16 show the most commonly used oral and IV products that had significant changes in wholesale acquisition cost (WAC) for Vizient members between April 2018 and March 2019.


Table 15. Change in utilization and pricing for IV oncology drugs

Drug name Manufacturer Utilization trend

Aldesleukin Prometheus Therapeutics ↓

Rituximab hyaluronic acid Genentech ↑

Durvalumab AstraZeneca ↑

Thiotepa Amneal Biosciences ↑

Vizient data for April 2018 through March 2019.

Abbreviations: IV = intravenous

Table 16. Change in utilization and pricing for oral oncology drugs

Drug name Manufacturer Utilization trend

Pazopanib Novartis ↓

Nilotinib Novartis ↓

Lenalidomide Celgene ↑

Abemaciclib Lilly ↑

Olaparib AstraZeneca ↑

Vizient data for April 2018 through March 2019.

What’s ahead

Additional indications for current PD-1 and PD-L1 products are expected to be approved in coming years, with new agents introduced in this category. Use of immunotherapy is expected to continue to grow as the overall number of diseases it can be used for increases and its place in therapy broadens.

Innovative agents to watch for in the near future include:

• Entrectinib, for patients with neurotrophic-tropomyosin receptor kinase-positive solid tumors

• Quizartinib, for patients with refractory AML

• Darolutamide for patients with castration-resistant prostate cancer

• A number of new generics are also expected to come on the market over the next two years. Table 17 shows the earliest potential introduction dates for anticipated generic formulations.


Table 17. Future oncology generics: earliest possible market entry dates

Drug (brand name) Date

Carfilzomib (Kyprolis) Jan 2020

Enzalutamide (Xtandi) Feb 2020

Lanreotide (Somatuline Depot) Mar 2020

Mephalan HCl (Evomela) May 2020

Pomalidomide (Pomalyst) Aug 2020

Lenalidomide (Revlimid) Aug 2020

Lapatinib (Tykerb) Sep 2020

Data derived from GlobalData Pharmaceutical Drug Database.1


• Spotlight on leukemia, including:

– Treatment regimens for CLL

– Treatment regiments for AML

– Total drug spend for AML and CML approved therapies

• Outcomes measures and adverse effects analysis of CAR T procedure codes

• Pediatric and adult CAR T cost analysis

1. GlobalData Pharmaceutical Drug Database [database online]. London; GlobalData; 2018. https://pharma.globaldata.com. Accessed June

4, 2019.

Infectious disease agents Overall period projected inflation rate: 3.18%

Systemic antibacterials/antifungals

Period projected inflation rate: 2.35%

A closer look

• Approximately 56% of the anti-infective category is in acute care, which decreased by 4% from the previous Vizient drug price forecast. Almost three-fourths of spend in acute care is for antibacterials and antifungals (data not shown). In the non-acute setting, the primary cost drivers are antivirals used for the treatment of hepatitis C and HIV.

• Daptomycin continues to account for the highest overall spend among Vizient members (Table 18), despite the introduction of a generic version in 2016. However, as a percentage of overall spend,

https://pharma.globaldata.com/


daptomycin has declined steadily from previous Drug Price Forecasts. Spend for linezolid, also used for MRSA and other drug-resistant gram-positive organisms, has fallen; it no longer appears in the top 10 highest-spend drugs for Vizient members.

Table 18. Top 10 antibacterials/antifungals in acute care based on annual spend among Vizient members

Rank Drug

AHFS category

1 Daptomycin Cyclic lipopeptides

2 Vancomycin Glycopeptides

3 Piperacillin/tazobactam Extended spectrum penicillin

4 Ertapenem Carbapenem

5 Rifaximin Rifamycin

6 Posaconazole Azole antifungals

7 Liposomal amphotericin B Polyene antifungals

8 Ceftaroline 5th-generation cephalosporin

9 Micafungin Echinocandin antifungals

10 Ceftazidime/avibactam sodium 3rd-generation cephalosporin

Vizient member data for April 2018 through March 2019. 340B purchases are excluded.

Abbreviations: AHFS = American Hospital Formulary Service; DPF = Drug Price Forecast.

What’s ahead

Although there has been a robust pipeline of investigational antibacterials in the past due to legislative actions in the middle part of the decade,1,2 there are significant concerns about the dwindling antibiotic pipeline. The FDA’s decision to give iclaprim and fosfomycin a complete response letter, the bankruptcy of Achaogen, the exit of major pharmaceutical companies from the infectious diseases market and the lack of a strong phase 3 pipeline leave many concerned that there will be no new antimicrobials in the future to treat multidrug-resistant infections.3

.

1. Department of Health and Human Services. Generating Antibiotic Incentives Now: Required by Section 805 of the Food and Drug Administration Safety and Innovation Act, Public Law 112-144. Food & Drug Administration website. https://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/UCM595188.pdf. Accessed May 18, 2019.

2. Antibiotics currently in global clinical development. The Pew Charitable Trusts website. https://www.pewtrusts.org/-/media/assets/2019/03/antibiotics-currently-in-global-clinical-development.pdf?la=en&hash=078238EF15FACD9753ED2C4EBAB58F16B664B59E. Published March 12, 2014. Updated September 2018. Accessed May 18, 2019.

3. Langreth R. Antibiotics aren’t profitable enough for big pharma to make more. Bloomberg Businessweek website. Available at https://www.bloomberg.com/news/articles/2019-05-03/antibiotics-aren-t-profitable-enough-for-big-pharma-to-make-more?srnd=premium. Published May 3, 2019. Accessed May 18, 2019.

https://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/UCM595188.pdf

https://www.pewtrusts.org/-/media/assets/2019/03/antibiotics-currently-in-global-clinical-development.pdf?la=en&hash=078238EF15FACD9753ED2C4EBAB58F16B664B59E




https://www.bloomberg.com/news/articles/2019-05-03/antibiotics-aren-t-profitable-enough-for-big-pharma-to-make-more?srnd=premium



• Distribution of total antimicrobial spend by therapeutic category

• Cost drivers among antivirals and antibacterials

• Research and pipeline activity for emerging products to treat infections

Antivirals: a focus on hepatitis C and HIV

Hepatitis C


HIV


A closer look

• There are currently seven first-direct acting antivirals (DAAs) on the market following the voluntary discontinuation of three products in 2018: dasabuvir/ombitasvir/paritaprevir/ritonavir (Viekira; AbbVie), ombitasvir/paritaprevir/ritonavir (Technivie; AbbVie) and simeprevir (Olysio, Janssen Pharmaceuticals).

• Figure 3 shows the percentage of spend for various hepatitis C medications available in 2019 based on national sales data. Since the January 2019 edition of the Drug Price Forecast, overall percentage of spend in the market for ledipasvir/sofosbuvir (Harvoni; Gilead Sciences) declined by almost 15% and sofosbuvir (Solvaldi; Gilead Sciences) is no longer in the top five. The percentage of spend for sofosbuvir/velpatasvir (Epclusa; Gilead Sciences) has remained steady, whereas the share of the market for glecaprevir/pibrentasvir (Mayvret; AbbVie) has increased 10-fold (from 2.5% as of July 2018 to 25%) for calendar year 2018.

• Although the number of products in the market is retracting, the population for which hepatitis C medications is approved expanded in 2019: On April 30, 2019, Abbvie received FDA approval for the use of glecaprevir/pibrentasvir in adolescents 12 years and older.1


Figure 3. Percentage of annual spend for 2018 on hepatitis C medications

Data derived from IQVIA SMART database, January to December 2018 (annualized).2

Note: Sofosbuvir (Sovaldi) and daclatasvir (Daklinza) each accounted for less than 1% of annual spend and are not included in the figure.

Pricing wars

• Overall price per course of therapy has been declining substantially as a result of recent moves from manufacturers in response to pressure to lower medication prices.

• Figure 4 shows the overall trend in spend for DAAs from 2013 through 2018. Total spend in this category peaked in 2015 at $18.4 billion annually and was $7.1 billion in 2018. Average price per unit in 2018 has decreased by 22% compared with 2017.


Figure 4. Annual U.S. spend on direct-acting antivirals for the treatment of hepatitis C

Data derived from IQVIA SMART database, January to December 2018.2

Access to care

• Given that cure rates exceed 95%, efforts to make DAA therapy more accessible have increased, especially in resource-limited settings such as correctional facilities and among populations such as the homeless and those who are uninsured or underinsured.

• Although costs have declined, a total course of treatment is still expensive and Medicaid is restricting access to the sickest patients. The primary unmet need in this area will continue to be treatment funding for the publicly insured population (e.g., those on Medicaid or incarcerated), who account for the majority of patients with untreated disease.3


• Research and pipeline activity for hepatitis C and HIV treatments

1. Mavyret supplement approval letter. Food & Drug Administration website.

https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2019/209394Orig1s006ltr.pdf. April 30, 2019. Accessed May 18, 2019. 2. IQVIA SMART [database online]. Durham, NC: IQVIA; 2018. https://customerportal.imshealth.com/sites/imsportal. Accessed May 18,

2019. 3. Clark M. Louisiana moves ahead with subscription model to buy hepatitis C drugs. Nola.com website.

https://www.nola.com/news/2019/01/louisiana-moves-ahead-with-netflix-subscription-model-to-buy-hepatitis-c-drugs.html. Updated January 11, 2019. Accessed May 18, 2019.

https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2019/209394Orig1s006ltr.pdf


https://www.nola.com/news/2019/01/louisiana-moves-ahead-with-netflix-subscription-model-to-buy-hepatitis-c-drugs.html


Vaccines


A closer look

• In the last several iterations of the Drug Price Forecast, pneumococcal vaccines have consistently dominated overall spend in this category. More than one-third of total expenditures are for two products (Table 24): pneumococcal 13-valent conjugate vaccine (Prevnar; Pfizer) and pneumococcal vaccine polyvalent (Pneumovax; Merck).

Table 19. Top 10 noninfluenza vaccines by percentage of total vaccine spend among Vizient members

Brand name Manufacturer Immunizes against

Prevnar Pfizer Streptococcus pneumoniae

Gardasil 9 Merck Human papillomavirus

Pneumovax Merck S. pneumoniae

Shingrix GlaxoSmithKline Herpes zoster (shingles)

Boostrix GlaxoSmithKline Tetanus, diphtheria and pertussis

Engerix B (adult) GlaxoSmithKline Hepatitis B

M-M-R II Merck Measles, mumps and rubella

ProQuad Merck Measles, mumps, rubella and varicella

Varivax Merck Varicella virus (chickenpox)

Adacel Sanofi Pasteur Tetanus, diphtheria and pertussis

Vizient member data for April 2018 through March 2019.


• Cost drivers and market dynamics for vaccines

• Research and pipeline activity for hepatitis C and HIV treatments


Immunomodulators and disease-modifying therapies Immunomodulators

Period projected inflation rate: 2.17% Disease-modifying therapies


A closer look

• Based on IQVIA National Sales Perspectives data from 2018, autoimmune disease therapies ranked third in overall nondiscounted spending, accounting for 54.1% of total U.S. market nondiscounted drug spend, an increase from 23.4% in 2014. In 2018, MS therapies ranked seventh in overall nondiscounted spending, comprising 18.8% of total U.S. market nondiscounted drug spend, an increase from 12% in 2014.1

• IQVIA data also revealed that in 2018, adalimumab was the top medicine in overall nondiscounted spending, accounting for 18.3% of total U.S. market nondiscounted drug spend, an increase from 7.4% in 2014. Etanercept ranked second on that list, representing 8% of total U.S. market nondiscounted drug spend, up from 5.9% in 2014.1 Adalimumab and etanercept are also among the top drugs based on Vizient member drug spend from April 2018 through March 2019, along with infliximab (Remicade; Janssen).

What’s next

• Even though the list prices of the newly launched MS drugs are less expensive than current oral treatments, generic competition is imminent for older therapies such as fingolimod (Gilenya; Novartis) and dimethyl fumarate (Tecfidera; Biogen). Table 20 shows the top MS therapies by spend among Vizient members.


Table 20. Top disease-modifying therapies by spend among Vizient members

Vizient member data for April 2018 through March 2019.

1. IQVIA Institute for Human Data Science. Medicine Use and Spending in the U.S.: A Review of 2018 and Outlook to 2023. IQVIA website. https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-a-review-of-2018-and-outlook-to-2023. Published May 9, 2019. Accessed May 19, 2019.

Plasma critical care products: IgIV and albumin Plasma


IgIV


A closer look

• Demand for IV immunoglobulin (IgIV), the current market driver determining global plasma need, has been increasing steadily for the last year, putting significant pressure on manufacturers to supply the market.1

• Immunoglobulin products from all suppliers experienced some disruptions in 2018 into 2019 as manufacturers were challenged to meet demand and the limited supply of various IgIV products affected the market. The enhanced volume-weighted average price for IgIV has risen steadily and is anticipated to continue to rise in 2019 and into 2020.

Drug (brand name)

Ocrelizumab (Ocrevus)

Dimethyl fumarate (Tecfidera)

Fingolimod (Gilenya)

Glatiramer acetate (Copaxone)

Natalizumab (Tysabri)

Interferon beta-1a (Avonex and Avonex Pen)

Interferon beta-1a/albumin human (Rebif and Rebif Rebidose)

Interferon beta-1b (Betaseron)

Glatiramer acetate (Glatiramer Acetate)

Peginterferon beta-1a (Plegridy and Plegridy Pen)

Glatiramer acetate (Glatopa)

Interferon beta-1b (Extavia)

Thalidomide (Thalomid)

Interferon gamma-1b, recombinant (Actimmune)

Available in the complete July 2019 Drug Price Forecast edition for Vizient Pharmacy Program participants:

• Cost drivers and drug approvals for multiple sclerosis (MS) and rheumatoid arthritis (RA), as well as autoimmune diseases

• Pipeline development for MS and RA treatments

https://www.iqvia.com/institute/reports/medicine-use-and-spending-in-the-us-a-review-of-2018-and-outlook-to-2023


• Albumin supply continues to exceed demand in the market, leading to competitive pricing advantages and offerings by suppliers as the enhanced volume-weighted average price of albumin has decreased. This trend is expected to continue in 2019 as suppliers institute pricing reductions across the market, but may start to stabilize in 2020.

What’s ahead

• Vizient anticipates that supply of IgIV will continue to be limited for the remainder of 2019 and into the first half of 2020 as manufacturers work to increase production to meet higher-than-expected demand. New entrants into the market are not anticipated to have a large effect on supply and prices are expected to rise steadily in the coming year for immunoglobulin products, while albumin, for which supply remains abundant, will likely see price reductions.

1. Boyle JG. Immunoglobulin product availability issues: The sky is not falling but the world needs more plasma. Immune Deficiency Foundation website. https://www.primaryimmune.org/news/ig-availabilty-issues. Published January 15, 2019. Accessed May 20, 2019.


• IgIV pricing trend: enhanced total volume-weighted average price per gram

• Albumin pricing trend: enhanced total volume-weighted average price per EU

• Cost drivers and market dynamics impacting the supply of IgIV

https://www.primaryimmune.org/news/ig-availabilty-issues


Budget tools and resources

How close were we? Reviewing the accuracy of the Drug Price Forecast projections Our review showed that for those five editions, the actual price inflation rate was within three standard errors of the projected inflation rate; Table 21 shows the value of one standard error, while Figure 16 shows the value of three standard errors. Figure 5 illustrates the 99.7% confidence interval of the projections, with bars representing the three standard errors of each price change. Over that time the number of line items in the top 80% of member spend has increased, while the number of drugs with the same active pharmaceutical ingredient has remained fairly consistent, reflecting an increase in product variability.

Table 21. Drug Price Forecast projected versus actual price increases

Forecast publication date

No. of line items in top 80% of spend

Projected price increase, %

Projected standard error, %

Actual price increase, %

Actual standard error, %

Jul 2015 637 6.8 1.0 6.2 1.0

Jan 2016 669 7.9 1.0 5.4 0.9

Jul 2016 513 6.0 1.0 6.0 1.0

Jan 2017 626 6.3 1.0 4.2 0.8

Jul 2017 629 7.4 1.0 4.3 0.8

Figure 5. Comparison of Drug Price Forecast estimates versus actual price change

a Projections in each edition of the Drug Price Forecast are for periods six to 18 months after the publication date.



• Price projections weighted by Vizient member purchases

• Drug Budget Forecast Tool

• Vizient Pharmacy Strategic Action Plan

• Customizable letter to the C-suite from pharmacy

For questions about this report to learn more about Vizient Pharmacy Program membership, please contact us at [email protected]



Contributors Terri Lyle Wilson, Director, Supply Chain Services — Pharmacy, Children’s Hospital Association

Vizient staff Kevin Baniak, Lead Analyst

Jered Bauer, Associate Vice President, Pharmacy Analytics

Carina Dolan, PharmD, BCOP, Director for Clinical Oncology and Pharmaceutical Outcomes, Center for Pharmacy Practice Excellence

Emily Diehl, PharmD, BCPPS, Pharmacy Executive Director, Advisory Services

Leah Gannon, MBA, Director of Pharmacy, Sourcing Operations

Walter Geba, MS, PharmD, Vice President, Pharmacy Operations, Provista

Randy Gerwitz, RPh, Consulting Director, Pharmacy, Performance Services

Katrina K. Harper, PharmD, MBA, BCPS, DPLA, Senior Clinical Manager, Center for Pharmacy Practice Excellence

Keisha Hyman-Gifth, Portfolio Executive, Sourcing Operations

John Kim, PharmD, MPH, Senior Portfolio Executive, Sourcing Operations

Dan Kistner, PharmD, Senior Vice President, Pharmacy

Kristi Kuper, PharmD, BCPS, Senior Clinical Manager, Infectious Diseases, Center for Pharmacy Practice Excellence

Leslie Larsen, Senior Portfolio Executive, Sourcing Operations

Stacy Lauderdale, PharmD, BCPS, Senior Director, Center for Pharmacy Practice Excellence

Bruce Leavitt, PharmD, MBA, BCPS, Consulting Director, Pharmacy, Performance Services

Jimmy Loftin, RPh, Director, Sourcing Operations

Steven Lucio, PharmD, BCPS, Assistant Vice President, Center for Pharmacy Practice Excellence

Martin McBride, RPh, MS, BCPS, Senior Portfolio Executive, Sourcing Operations

Michael McGiboney, RPh, Director, Pharmacy — CHA, Sourcing Operations

Amanda Melton, PharmD, BCPS, Clinical Analytics Coordinator

Pedram Pahlavan, PharmD, Senior Director, Acentrus Specialty Pharmacy

Betty Reynolds, Senior Portfolio Executive, Sourcing Operations

Michele Rice, PharmD, BCOP, Consulting Director, Pharmacy

Steve Rudner, MS, PharmD, Senior Portfolio Executive, Sourcing Operations

Bryan Shaw, PharmD, Manager, Pharmacy Analytics


Eric Shaw, RPh, Senior Portfolio Executive, Sourcing Operations

Gloria Sumler, Senior Portfolio Executive, Sourcing Operations

Jade Vitug, PharmD, PGY2 Pharmacy Informatics Resident, Pharmacy Analytics

April H. Yoo, PharmD, MPH, BCPS, Senior Portfolio Executive, Sourcing Operations

George Zula, RPh, MBA, Vice President, Acentrus Specialty Pharmacy

Acknowledgments The authors would like to thank Indiana University Health’s Jon Brown, PharmD, MHA, DPLA, system manager, Pharmacy Sourcing/Logistics, and William H. Shaw, RPh, director, Statewide Pharmacy Purchasing and Logistics, both of whom provided assistance with the combating counterfeit drugs section. Thanks also to Christine Meyer, PharmD, and Raquel Barrack, PharmD, UW Medicine PGY2 Health-System pharmacy administration residents.

For more information, contact [email protected].


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