Spending on Traditional Drugs Drops as Specialty Medicines Rise

Spending on Traditional Drugs Drops as Specialty Medicines Rise

Americans are spending less on pills and other conventional medications for the first time in two decades, and more on complex injected drugs, a study has found.

Use of pills and other non-injected, non-specialty drugs fell 1.5 percent last year, according to the report by the pharmacy management company Express Scripts Holding Co. Traditional drugs are medicines like pills that don’t require special means of administration or frequent monitoring.

The drop is a reflection of trends in the pharmaceutical industry that include development of biotechnology drugs made from living organisms that require injection as well as expensive injectable or infused “specialty” medications that require special care. Wider use of cheaper generic equivalents of pills has helped reduce spending on conventional medicines, even as total pharmaceutical spending continues to rise.Express Scripts, which is the biggest pharmacy benefits manager by sales, said it was necessary to put pressure on the cost of specialty drugs and biotechnology medicines, in part through developing cheaper copies called biosimilars or biogenerics.

“Increased drug competition, in the form of biosimilars, is necessary to offer more affordable medication for patients afflicted with these complex specialty conditions,” said Glen Stettin, St. Louis, Missouri-based Express Script’s senior vice president of clinical, research and new solutions, in a statement.

Total Spending

In total, spending on all types of medicines grew 2.7 percent in 2012, about the same as in 2011, according to the report. That was driven by an 18.4 percent surge in spending on specialty drugs, led by medications for cancer, inflammatory diseases like rheumatoid arthritis, HIV/AIDS, and multiple sclerosis. The fastest-growing category was drugs for the viral infection hepatitis C, because of two new medicines, Vertex Pharmaceuticals Inc. (VRTX)’s Incivek and Merck & Co.’s Victrelis.

Among non-specialty drugs, spending on diabetes care took the greatest share as medications such as Eli Lilly and Co.’s Humulin and Sanofi (SAN)’s Lantus grew by 11 percent last year, according to the report.

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net;

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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