It's Complex: Rise in Diabetes Drug Costs in US Is Multifactorial

Miriam E. Tucker

October 16, 2020

The dramatic rise in cost of glucose-lowering medications in the United States in recent years has been due primarily to an increase in users, higher cost per user for analog insulin, and greater use of newer noninsulin medicines for type 2 diabetes, new research indicates.

Findings from a comparison of glucose-lowering medication expenditures during 2015-2017 compared with those between 2005-2007 were published in the October 2020 issue of Diabetes Care by Xilin Zhou, of the Division of Diabetes Translation, Centers for Disease Control and Prevention, Atlanta, Georgia, and colleagues.

Overall direct medical costs attributable to diabetes doubled from 2007 to 2017, rising from $116 billion to $237 billion.

And in an analysis of the medication data, Zhou and colleagues found that the annual national cost for glucose-lowering medications rose by 240%.

Total spending on insulin increased sixfold while total noninsulin spending doubled. The main contributing factors were a shift to insulin analogs and increased use of newer noninsulin glucose-lowering medications.

However, in an accompanying editorial, Simeon I. Taylor, MD, PhD, calls the analysis "simplified," and says that it "does not do justice to this extremely complicated topic."

Critical factors not adequately taken into account are the roles of rebates and discounts, loss of marketing exclusivity, new drug approvals, and different prices in different countries, says Taylor, of the Division of Endocrinology, Diabetes, and Nutrition, University of Maryland School of Medicine, Baltimore.

The United States, he says, contributes "disproportionately to funding pharmaceutical research and development whereas other high-income countries obtain similar benefits while paying lower prices."

"If the US wishes to promote health care equity and social justice, major changes need to be implemented."

But he does find reason for optimism, at least for the noninsulin drugs, noting, "Fortunately, after they become generic, these 'newer' drugs will be available at more affordable prices for essentially infinitely long periods of time in the future."

Understanding Contributing Factors Will Help Curb Growth in Costs

The data are from the nationally representative Medical Expenditure Panel Survey. About 5000 individuals were included for each study period. The annual national overall cost for glucose-lowering medications rose from $16.9 billion to $57.6 billion, an increase of $40.6 billion (240% increase). Of that, insulin accounted for $28.6 billion (169% increase) and noninsulin medications, $12.0 billion (71% increase).

Within the insulin category, 92% of the increased cost was for analogs although human insulin use rose slightly.

For the noninsulin medications, spending on the newer agents (dipeptidyl peptidase 4 [DPP-4] inhibitors, amylin analogs, glucagon-like peptide 1 [GLP-1] receptor agonists, and sodium-glucose cotransporter 2 [SGLT2] inhibitors) rose by 88%, and combinations by 15%, while spending for older medications (sulfonylureas, thiazolidinediones, alpha-glucosidase inhibitors, and meglitinides, with metformin analyzed separately) dropped by 34%. Most of that decrease was due to agents other than metformin.

Most of the increase in insulin spending came from the increase in cost-per-user.

However, the increase in the number of users contributed more than cost-per-user in the rise of most noninsulin groups.

"Understanding the factors contributing to the increase helps identify ways to curb the growth in costs," say Zhou and coauthors.

PBMs, Devastating Impact on Those Least Able to Afford Insulin

In his editorial, Taylor outlines several other factors that also contribute to the rise in diabetes drug costs.

Pharmacy benefit managers (PBMs) working on behalf of payers negotiate discounted prices that are below a drug's list price and often require drug manufacturers to pay rebates in exchange for favorable formulary placement. Such rebates and discounts were much smaller in 2007 than in 2016.

Although the PBM retains some of the rebate, a large portion is paid to the health plan or insurance company, thereby decreasing the net cost of the drug paid by that health plan/insurance company.

For insulin, the list price increased by 252% between 2007 and 2016, while the net price rose by just 57% overall and actually dropped between 2014 and 2016, Taylor notes.

Importantly, however, uninsured patients are required to pay the full list price and don't benefit from rebates or discounts.

"It is tragic that the present system has a devastating impact on those patients who are least able to afford insulin's rapidly increasing gross price," Taylor writes.

Generics Will Help but Cost Disparities Between Nations Remain

Two drug classes that were relatively high-priced when they were brand name only in 2005-2007, alpha-glucosidase inhibitors and thiazolidinediones, had become generic by 2015-2017, which likely accounted for the decrease in annual cost-per-user, from $803 to $208, for these "older" drugs.

And in 2005-2007, only two of the "newer" drugs, sitagliptin and short-acting exenatide, were widely used.

Two drugs classified as "newer" in the analysis, the SGLT2 inhibitor dapagliflozin and the DPP-4 inhibitor saxagliptin, will go off-patent in October 2020 and July 2023, respectively.

Generics will soon follow, thereby significantly reducing their prices, Taylor notes.

"The compelling clinical benefits of these 'newer' drugs drove the dramatic increase (1558%) in the number of users. From a clinical and humanistic perspective, these 'newer' drugs provide significantly improved benefits to people with type 2 diabetes even if they also led to increased spending," he points out.

And a final factor relates to the fact that the United States doesn't implement strict regulations to limit how much manufacturers can charge for drugs, as other countries do.

So, to recoup the high costs of research and development — as compared to the lower costs of manufacturing, selling, and distributing — companies charge more for drugs in the United States than in other countries.

"Understandably, the US population is not universally enthusiastic about this arrangement," he observes.

"These complex issues remain topics for heated debate," Taylor emphasizes.

Physicians Must Communicate With Patients About Medication Costs

Regardless of the reasons for the cost increases, Zhou and colleagues stress that physicians need to communicate with patients about any financial barriers they may have in obtaining medications.

"Physicians make their prescription decisions by considering more of the clinical benefits of medications than the cost of medications," they observe.

But patients, including those with financial difficulties to pay for their medications, "hesitate to discuss cost issues with their providers. Transparency about the cost burden of medication selection in discussions between physicians and patients could have profound implications for lowering medication costs," they conclude.

Zhou has reported no relevant financial relationships. Taylor has reported being a consultant for Ionis Pharmaceuticals and previously worked at Bristol-Myers Squibb (2002-2013), where he was vice president of cardiovascular and metabolic disease research.


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Reviewed on 10/16/2020
SOURCE: Medscape, October 16, 2020. Diabetes Care. 2020;43:2396-2402.

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