MINNEAPOLIS — Drug spending trends moderated again in 2017, with Eagan-based Prime Therapeutics reporting a slight year-over-year decline in terms of per-member, per-month expenditures on medications.
The decline applied in varying degrees to employer plans and the Medicare and Medicaid public health insurance programs, according to the report being released Tuesday, with the biggest drop seen in the Medicaid program for lower-income Americans.
Prime Therapeutics is the fourth largest pharmaceutical benefits manager in the country. Earlier this month, St. Louis-based Express Scripts, which is the nation’s largest PBM, reported a similar slowdown in drug spending during 2017.
“While we’re thrilled drug expenditures for our clients declined in 2017, this doesn’t mean drug costs no longer present a challenge,” David Lassen, chief clinical officer at Prime Therapeutics, said in a statement. “Prescription drugs still represent 20 to 30 percent of costs for our health plans and employers.”
PBMs manage the pharmacy portion of health insurance benefits. They negotiate prices with drug manufacturers as well as the pharmacies that dispense medications. PBMs also advise health plans on “formularies” that assign particular drugs to tiers with different copay requirements.
The report summarizes spending on behalf of nearly two dozen Blue Cross and Blue Shield insurers that hire Prime Therapeutics, including Eagan-based Blue Cross and Blue Shield of Minnesota. The report did not specify how much the insurers collectively spent on medications in 2016 or 2017, nor did it characterize changes in membership between the two years.
Per member per month spending on drugs in commercial plans was down 0.2 percent, compared with a decline of 0.8 percent in Medicare and a decline of 5.4 percent in Medicaid, according to the report.
Medication use increased in all three groups, but unit prices declined by a larger factor.
The report noted that a small number of high-priced medications still are having an outsized impact on the broader numbers.
Of the 46 drugs approved by the Food and Drug Administration last year, eight had an average annual price of $96,000, Lassen said.
Prime Therapeutics employs about 3,000 people with more than 2,500 located in Minnesota. Blue Cross of Minnesota is one of 18 insurers that own a portion of Prime Therapeutics.
The state’s PBM sector has been growing with Prime Therapeutics as well as OptumRx, the PBM operated by Minnetonka-based UnitedHealth Group. OptumRx is the nation’s third largest pharmaceutical benefits manager.
