New Therapeutic Competition Generates Billions in Savings

Brand-name medications introduced from 2013 to 2017 across 12 therapeutic classes reduced net commercial spending by over $10 billion on existing medications, according to a new Health Affairs study.

Entry of new therapeutic competition led to a lower net price growth for 10 of the 12 drugs studied. Four of the medications showed a statistically significant decrease in the growth rate of net prices, including the long-acting insulin Levemir (insulin detemir) and the asthma inhaler Advair (fluticasone/salmeterol). Overall, the introduction of new drugs was associated with a 4.2% decrease in annual net price growth and a 6.8% immediate decrease in the mean net price of the existing drugs.

Among the 12 medications, eight saw lower commercial drug spending with the entry of new competition. Restasis (cyclosporine), a treatment for chronic dry eye, saw more than $7 billion in lower net spending within three years of competitor entry.

The researchers suggested these findings “demonstrate that new therapeutic competition allows pharmacy benefit managers to use formulary management to decrease net prices and reduce drug spending.”

Most people covered by commercial health plans currently have pharmacy-benefit coverage for the 12 drugs studied and their competitors, with utilization management restrictions, according to coverage policy data from MMIT Analytics (MMIT is the parent company of AIS Health). Most commercial enrollees have better access to the new competitors compared to the incumbent drugs.

This infographic was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits.

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