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Monday, 19 September 2016 02:24

Drug Price Relief may be Fleeting Despite “Patent Cliff”

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Employers spend approximately 18-20% of their healthcare costs on prescription drugs, and the rapidly increasing cost of specialty drugs is causing this to inch ever up.  To offset these cost hikes, we’re always keeping our eyes on expensive drugs that are coming off patent and facing cost-slashing competitors soon. There are eight blockbuster drugs (those with a billion dollars or more in sales) coming off patent in 2016.  

Once a drug’s patent protection expires, the original manufacturer typically gets to enjoy another three to six months of “generic exclusivity,” where only one other manufacturer is allowed to produce a competing drug, and thus, the price of the generic is not that much lower than the original brand name drug.  Once that period expires, there can be anywhere from two to ten competitors with FDA approval to make the generic alternatives, driving prices down by 75-90% from the original brand name cost.

According to OptumRx (with additional information from PharmacyTimes.com), the eight blockbuster drugs coming off patent this year represent nearly $120 Billion in U.S. sales alone.  They include:

  • Epzicom© – a combo of two drugs that help control HIV complications
  • Crestor© – 21 million prescriptions were written for this drug in 2015 to help reduce cholesterol
  • Benicar© – this drug accounts for about 15% of the high blood pressure control category
  • Seroquel XR© - used to treat depression, bipolar disorder, and other mental health issues
  • Norvir© and Kaletra© - these drugs work together to fight HIV
  • Zetia©  - another cholesterol lowering medication
  • Humira© - as of early 2016 this was the largest selling drug in the world by total dollars, and is used to treat rheumatoid arthritis, Crohn’s disease, and other autoimmune diseases

Now, for those of you in the large group or partially self-funded markets where claims matter, which of these patent expirations will actually lower your costs?

Crestor© is most likely costing your plan a decent amount, and with ten manufacturers approved to make the generic, and the exclusivity period already completed, we would expect you’ll be seeing lower prices in your claims reports soon.  In contrast, while Humira© runs a huge price tag if you happen to have any scripts for it, the odds are more complicated on this one. Due to multiple primary and secondary patents and court challenges to some of those patents, competing biosimilar drugs may not be available for years. The other drugs are likely to make a small difference in offsetting the hugely expensive new specialty drugs, such as Solvaldi which costs $84,000 for just one 12-week course of treatment!

For strategies on how you can proactively control your pharmacy costs regardless of patent expirations, please contact your Fall River Account Executive or This email address is being protected from spambots. You need JavaScript enabled to view it..

Read 496 times Last modified on Wednesday, 26 October 2016 11:00
Kristen Russell

Kristen founded Fall River Employee Benefits as the culmination of her insurance industry career as an actuary, underwriting executive & consultant. As an Assistant Vice President at Great-West Healthcare (now part of CIGNA), she managed a $1 Billion block of health insurance. She also worked as a Senior Consultant at Reden & Anders, consulting to insurance companies and large employers throughout the country. Ms. Russell received a Bachelor of Science, Business Administration in Actuarial Science, is a member of the American Academy of Actuaries and achieved Fellowship in the Society of Actuaries through a rigorous nine-year series of exams.

Kristen grew up in Iowa but has lived in Colorado since 1993, currently living near our office in the Lower Highlands neighborhood near downtown Denver.  She enjoys bicycling, hiking, traveling and has a special passion for non-profit volunteering. She is married to an incredibly talented photojournalist, has two adult stepdaughters and an adorable Border Collie/Lab mix named Chaco.