Market Overview

Vizient Drug Price Forecast Projects Lower Price Inflation in 2019 Than 2018

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Prices for pharmaceuticals are projected to rise by 4.92 percent in
2019, down from an estimated 7.61 percent in 2018

Vizient,
Inc.
released today its latest 2018
Drug Price Forecast
, which estimates health systems can expect a
4.92 percent increase in the price of pharmaceuticals in 2019. This
estimate represents an anticipated slower rate of growth as compared to
previous Vizient forecasts, such as the 7.61 percent value projected for
2018.

Although the rate of price increases is projected to slow, the specialty
pharmacy market is expected to continue its rapid pace of growth, which
accounts for the majority of overall price inflation. According to a
recent industry analysis, specialty pharmaceuticals now account for more
than 46 percent of the total spend on drugs in the U.S., in spite of
being used for very small and targeted patient populations.

"While the projected increase for 2019 is less than 2018, it is still
growing quickly," said Dan
Kistner
, Pharm.D., senior vice president, pharmacy solutions for
Vizient. "Two key themes we saw were the continued growth of specialty
pharmacy products as a share of total spending and the critical
importance of ongoing, robust generic and biosimilar competition on
restraining overall price growth."

The Drug Price Forecast was compiled by Vizient, the largest
member-driven health care performance improvement company in the
country, with a membership base that includes academic medical centers,
pediatric facilities, community hospitals, integrated health delivery
networks and non-acute health care providers, and represents
approximately $100 billion in annual healthcare purchasing volume. An
executive summary can be accessed here.

Vizient's Forecast notes that there have been several positive
developments since the last report, including improvements in specialty
pharmacy management and increased government attention to cost issues.
However, several ongoing challenges remain, such as unsustainable
introductory costs for new drugs, the opioid addiction crisis, supply
chain interruptions and reimbursement issues that continue to drive
price inflation.

"Our Drug Price Forecast is an essential resource for health system
leaders who need a reliable assessment of pharmacy pricing trends in
order to anticipate and adapt to the specific and overall challenges in
drug pricing," said Kistner. "In an analysis of the previous Drug Price
Forecast overall price projections, we found our estimates to be within
one percentage point of actual inflation rates."

In addition to the pricing projections, the executive summary of the
Drug Price Forecast offers insights into topics such as specialty
pharmaceuticals, oncology drugs, infection disease agents and drug
shortages, as well as a timeline of anticipated major events that will
affect pharmacy practice in the coming months.

Highlights from the report include:

  • Generics and Biosimilars: The introduction of market
    competition in the form of new biosimilar and generic drugs has been
    the primary mechanism for containing drug spending. In fact, 79% of
    our projected price inflation will be caused by drugs with no
    competition. Unfortunately, biosimilar adoption is still low. For
    example, biosimilars only represent 3% of the infliximab market, one
    of the most commonly used biologics in clinical practice.
  • Drug Shortages: While drug shortages appear to have peaked, the
    total number is not trending down. In a collision of crises, the DEA's
    efforts to limit opioid quotas has inadvertently exacerbated the
    overall drug shortage problem. Beyond understanding the impact and
    causes of drug shortages, Vizient works to lessen the negative impacts
    of shortages for member hospitals through education, communication and
    advocacy efforts.
  • Specialty Pharmaceuticals: The medications that account for the
    greatest proportion of spending are concentrated in therapeutic
    classes, such as drugs that treat multiple sclerosis, hepatitis C and
    cancer, as well as disease-modifying anti-rheumatic drugs (DMARDs).

The Vizient Drug Price Forecast reflects the collective expertise of
over two dozen employees of the Vizient pharmacy sourcing and clinical
teams along with external resources, including its members. It is based
on the analysis of data from Vizient's Pharmacy Program, which compiles
member participants' purchases (price and volume) in hospital and
non-acute care settings. Vizient bases inflation estimates on price
change history during the last 36 months, as well as current knowledge
of contract allowances and marketplace factors, such as expiring patents
and anticipated new competition.

The forecast is an important resource for pharmacy leaders in developing
annual budget projections for their health systems. Vizient conducts the
pricing analysis biannually each year to provide insight on factors
driving pricing and practice changes in the pharmaceutical industry.

About Vizient, Inc.

Vizient, Inc., the largest member-driven health care performance
improvement company in the country, provides innovative data-driven
solutions, expertise and collaborative opportunities that lead to
improved patient outcomes and lower costs. Vizient's diverse membership
base includes academic medical centers, pediatric facilities, community
hospitals, integrated health delivery networks and non-acute health care
providers and represents approximately $100 billion in annual purchasing
volume. The Vizient brand identity represents the integration of VHA
Inc., University HealthSystem Consortium and Novation, which combined in
2015, as well as MedAssets' Spend and Clinical Resource Management (SCM)
segment, including Sg2, which was acquired in 2016. In 2018, Vizient
again received a World's Most Ethical Company designation from the
Ethisphere Institute. Vizient's headquarters are in Irving, Texas, with
locations in Chicago and other cities across the United States. Please
visit www.vizientinc.com as
well as our newsroomblogTwitterLinkedIn and YouTube pages
for more information about the company.

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