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Express Scripts’ Prescription Price Index shows continued inflation in the price of medications, with the average list price of the most commonly used brand drugs increasing nearly 11 percent in 2016. From the base price of $100.00 set in January 2008, in December 2016 prices for the most commonly used brand medications increased to $307.86 (in 2008 dollars), a nearly 208 percent increase.

Medications that treat inflammatory conditions and diabetes remain the costliest therapy classes. One of every five dollars spent on prescription drugs was for medication to treat an inflammatory condition or diabetes.

Employers paid, on average, $3587.83 per prescription for a medication to treat an inflammatory condition, such as rheumatoid arthritis. Humira® (adalimumab) and Enbrel® (etanercept) were major trend drivers for the class, with unit cost increases between 10 and 18 percent. Despite having more than 15 available therapies in the class, these two medications accounted for approximately 70 percent of the market share in 2016.

Biosimilar competition in this class could significantly ease spending for employers; however delays in biosimilar availability have limited payers’ ability to achieve much relief.

Spending on diabetes medications increased 19.4 percent in 2016, driven by a 14.1 percent increase in unit cost. Total spending on insulins — which account for 40 percent of all diabetes spending — increased nearly 10 percent between 2015 and 2016. The average patient out-of-pocket cost for insulin was $36.69 per prescription (adjusted for difference in days’ supply), just $1.63 more than 2015.

In 2016, spending on oncology medications increased nearly 22 percent, making it the third-costliest class. Despite savings from generics, including imatinib, the generic for Gleevec®, unit costs for oral oncology medications increased 9.6 percent in 2016. List prices for oral oncology medications, which are not rebated or discounted to any significant extent, have doubled between 2011 and 2016, from $20 per unit to $40 per unit.

One in five people filled a prescription for a pain medication in 2016. Despite a 95 percent generic fill rate for this class of drugs, spending was driven by just two brand-name medications: Lyrica® (pregabalin) and OxyContin® (oxycodone). Pain medications are the fifth costliest class of drugs.

While the Pharmacy Benefit Management companies claim credit for holding down drug, prices, some are critical of the PBM industry.

Three PBMs – Express Scripts, CVS Health and Opitmum RX, a division of UnitedHealth Group – control about 70 percent of the market. The Fortune 500 list gives a sense of their enormous size. UnitedHealth Group and CVS Health are numbers six and seven on the list, while Express Scripts shows up at number 22. J.P. Morgan Chase, Boeing and Microsoft all trail Express Scripts on the Fortune list as do the largest pharmaceutical manufacturers.

Critics of the big PBMs say their pricing practices and a lack of transparency are driving up costs and causing insurers to pay inflated prices without knowing it – eventually passing those costs on to their members. The alleged tactics include keeping an undisclosed amount of the rebates they negotiate while offering their clients a much smaller cut, and charging a “spread” on each prescription that gets processed.

Rebates and spread pricing are agreed upon in the contracts signed by their clients and are very clear about who gets what, the PBMs say. But critics argue the door is open for price gouging without more transparency and if health plan sponsors aren’t savvy in negotiating those contracts.