Report Forecasts Double-Digit Increase in Cancer Drug Spending

The amount of money spent in the United States on oncology drugs is expected to rise from 8% to 15% a year through 2013 as newer, more effective therapies continue to prolong patient survival, according to a report released this week.

The 2011 Medco Drug Trend Report, developed by the pharmacy benefits management company Medco Health Solutions, Inc, said factors contributing to the growth in spending include the sheer number of oncology drugs in the pipeline, the lack of generic drugs that have pulled down costs in other areas of medicine, and the difficulty in developing biosimilar products in the short term.

“Biomedical advances often have the effect of increasing costs, and oncology drugs have indeed become more expensive as they have become more targeted, better tolerated, and easier to administer,” Medco analysts said in the report, adding that many new drugs launch with a cost of more than $3000 per month. “Oncology drug prices have risen more aggressively than those of many other medications.”

The report forecasts the annual growth rate for oncology drug spending at 10% to 12% this year, 13% to 15% next year, and 8% to 10% in 2013. Last year, spending rose 7.8%.

By contrast, overall spending on prescription drugs rose 3.7% during 2010, as generic drugs continue to eat into the market share of more expensive brand-name medicines.

Despite the growth rates, oncology drugs are not the largest driver of costs for pharmacy benefit plans, the report said. In fact, cancer drugs rank seventh, with diabetes, asthma and chronic obstructive pulmonary disease, and rheumatological medications as the top therapeutic categories.

However, the report noted that many cancer drugs are billed through medical benefit plans, not pharmacy plans, thus masking the full impact of the medication costs.

Medco gathers the data on spending rates and drug utilization from its large base of clients, which include health plans and employers that reportedly cover 65 million people. Analysts consider the report a gauge of pharmaceutical industry trends.

To read the report, visit Medco Drug Trend Report