Cost-conscious payers are eyeing higher prices on diabetes drugs

A time-honored technique for boosting drug sales is simple: Raise prices. Lately, plenty of drugmakers pressed by patent-cliff losses have done just that. But some notable price hikes on diabetes drugs may be backfiring with payers. With diabetes costs taking double-digit increases--and expensive newer meds launching--insurers are tightening restrictions on drug use.

Of course, the growing diabetes epidemic has helped push expenses upward. But price increases on drugs and devices are fueling the rise, too, AIS Health reports. Spending on diabetes meds grew by 10.4% last year, mainly because of an 11% hike in drug prices. In fact, the diabetes category accounts for the biggest expense growth of any traditional drug class, a Prime Therapeutics report states.

BlueCross BlueShield of Tennessee tells AIS Health that on a per-member basis, its diabetes treatment costs have grown by 33% from the first quarter of 2013 to the first quarter of 2014. Tops on its radar are price hikes on insulin drugs, notably Sanofi's ($SNY) Lantus, but the plan is seeing price increases on non-insulin brands, too. Even the prices on generics are going up, some payers say.

Last year, Sanofi raised U.S. prices on Lantus at least twice, with a 10% hike in April and another in August. Novo Nordisk ($NVO) boosted its sticker prices on the insulin product Levemir (10%) and the incretin mimetic Victoza (8%). Those two diabetes leaders aren't the only ones. A Bloomberg analysis in May found that Eli Lilly ($LLY) has raised prices on its Humulin treatment repeatedly over the past 5 years.

Last summer, the idea was that U.S. drug spending growth had actually gone negative, thanks to generics of all stripes, and so there would be room for diabetes costs to increase. Payers may see that differently.

Payers are worrying about new drugs coming down the pike, including the pricey SGLT2 inhibitors Invokana (canagliflozin) from Johnson & Johnson ($JNJ), and Farxiga (dapagliflozin) from AstraZeneca ($AZN). Catamaran ($CTRX) has put these meds on prior authorization, and both it and Prime Therapeutics are hewing closely to requirements that patients try metformin before any other class of diabetes meds.

BCBS Tennessee, meanwhile, is looking at all anti-diabetic drugs for "potential rebate opportunities" and potential increases in copays. Plus, it's continuing to restrict pricier drugs, even excluding some products, AIS Health says. And as FiercePharma has reported, Express Scripts ($ESRX) excluded two Novo products from its 2014 National Formulary, deeming rival products from Lilly a better deal.

- read the AIS Health piece

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