PBM hardball, specialty med slowdown to curb 2017 healthcare spending jump

Blockbuster drug launches have strained health systems budgets in recent years by driving sizable spending hikes. But that trend may be nearing a lull. Specialty drugs are “loosening their grip” on health spending growth, a new PwC report says.

Issued Tuesday, the report predicts steady healthcare spending expansion in 2017 at 6.5%, the same figure as 2016, and a number that PBM negotiations are helping to moderate, the analysts said. PwC's Health Research Institute suspects that political pricing pressure and their clients’ needs for narrow formularies will drive PBMs to negotiate even more, offsetting areas anticipated to drive growth such as greater access to behavioral health.

But it's not only PBM negotiations that will limit healthcare spending increases next year, the team said. They expect no new blockbusters in 2017, and they predict the tidal wave of hep C spending may be less of a factor in the big picture moving forward. That’s because hep C meds face different competitive dynamics now, while all of the prescriptions issued to this point have “shrunk the remaining population still living with hep C.”

Gilead’s Sovaldi first launched in late 2013 with an $84,000 price tag, but the California-based Big Biotech has since seen rivals from AbbVie and Merck & Co. enter the fray. Upon the introduction of Viekira Pak by AbbVie, leading PBM Express Scripts struck a deal with the Illinois drugmaker in exchange for a “significant discount,” leaving Gilead out of the loop for millions of patients. For its part, Merck took an “aggressive” approach to pricing its hep C entrant Zepatier, AbbVie CEO Richard Gonzalez recently said, helping the New Jersey drugmaker to steal market share.

Even still, the upcoming year represents an “inflection point,” PwC said, adding that employers--worried about a potential return of sky-high cost jumps--will “demand more value from the health industry.”

Also to play a part in the future of healthcare spending are PBM contracts structured around drug performance rather than volume, PwC says, a trend that has so far seen limited uptake but may be catching on. Novartis, with its heart failure med Entresto, was able to strike pay-for-performance deals with Cigna and Aetna, while PCSK9 competitors Amgen and Sanofi entered deals under similar terms for Praluent and Repatha, respectively. Industry watchers anticipate more of those to come.

- here’s the report

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