Employer Market Insights Report 2022

INSIGHTS REPORT

TABLE OF CONTENTS

EMPLOYER MARKET TRENDS

Editorial and Design Staff

STEPHANIE STEVENS, MPH Director, Marketing

TRADITIONAL PHARMACY TRENDS

JENNIFER BOSTICK Senior Graphic Designer

Contributors

EARL HURST

Senior Vice President, General Manager, PBM Markets

CHRISTOPHER SALIBA, P harm D, MBA Vice President, Clinical Account Management

KARIM PRASLA, P harmD , MS, BCPS Vice President, Clinical Outcomes, Advanced Analytics and Research

KATIE LOCKHART, MA Manager, Forecasting and Pharmacoeconomics

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©2022 Magellan Rx Management, LLC. Magellan Rx Management 2022 Employer Market Insights Report™. All rights reserved. All trademarks are the property of their respective owners. The content — including text, graphics, images, and information obtained from third parties, licensors, and other material (“content”) — is for informational purposes only. The content is not intended to be a substitute for professional medical advice, diagnosis, or treatment. Figures may be reprinted with the following citation: “Magellan Rx Management Employer Market Insights Report™, Fifth Edition, ©2022. Used with permission.”

EMPLOYER MARKET TRENDS

Welcome to the 5th edition of the Magellan Rx Employer Market Insights Report.

The Employer Market Insights Report is a one-of-a-kind publication highlighting the key insights that matter to your business. The report gives a view of overall trends and a breakdown of traditional and specialty trends including:

Three-Year Forecast Key Conditions to Watch

Well Managed Trend by 2024

Drivers of Trend Illustration of Prescriber Interventions

Trend for 2021 and forecasted trend for 2022 are expected to be net positive with traditional experiencing a negative or minimal positive trend, and specialty trending between 4-7%. There is a projected shift with specialty trend having a significant drop of almost 1% in 2023 and 3% in 2024 where historically this trend has been in double digits. This unprecedented shift in specialty is due to the introduction of multiple biosimilars. This shift can also be seen in the pipeline. Per member per month (PMPM) for the traditional pipeline is expected to outpace specialty in both 2023 and 2024 primarily due to the anticipated growth of Tirzepatide, which was only recently approved.

Drivers of the drug trend paralleled the beginnings of this changing story with the overall increase in utilization, but reduction in unit cost. Utilization of specialty medications did not slow, with a 7% increase in utilization in 2021, but due to continued cost containment measures saw a 3.4% reduction in unit costs. Utilization of traditional drugs was minimal, and that benefit continued to see reduction in unit costs creating an almost neutral, if not negative, drug trend.

Drug Trend Forecast 2021-2024

2021 Drug Trend Drivers

Key Pipeline Products Forecast

Methodology and Disclaimer

All forecasts are based on Magellan Rx methodology to project financial impact for years 2021, 2022, 2023 and 2024. Forecasting information is for informational purposes only. Forecasting assumes the adoption of biosimilar drugs, however, there is considerable uncertainly around approval timeline and interchangeability status. Therefore, this data does not reflect Magellan Rx Management’s decision on how to maximize the savings that will be potentially achieved with the introduction of the biosimilars. This report is based on the following methodology:

• Specialty drugs include only those covered on the pharmacy benefit and are based on MRx specialty definition.

• Cost per claim is based on average wholesale price (AWP); cost = employer liability after cost share.

• Overall drug trend and forecast is based on plan paid per member per month (PMPM) change year over year after rebates and network discounts.

• Specialty drug trend and forecast is based on plan paid PMPM change year over year after rebates and network discounts; individual condition drug trend and forecast is prior to rebate impact but includes network discounts.

• Traditional drug trend and forecast based on plan paid PMPM change year over year after rebates and network discounts; individual condition drug trend and forecast is prior to rebate impact but includes network discounts. Utilization divided into consumers (utilizers) and consumption (days, supply per utilizer).

TRADITIONAL PHARMACY TRENDS FORECAST

Traditional pharmacy trend was well managed in 2021. The robust traditional pipeline, specifically in diabetes, is forecasted to cause a slight increase in trend, but trend will remain below 3% over the next three years. The diabetes pipeline peaked in 2021 and will slow over the next three years, but will remain a double-digit trend slowing to slightly below 10% in 2024. While the trend may slow for diabetes, the PMPM will increase by 2024, accounting for 60% of PMPM for the top traditional categories.

Migraine is still a key condition on the traditional benefit with an almost double trend (49%) in 2021. The trend will decrease significantly over the next three years to almost 20%, but remains the key category with the highest trend.

SPECIALTY PHARMACY TRENDS FORECAST

Specialty pharmacy trend will see a significant shift over the next few years with an unprecedented negative trend in 2023 and 2024. Although there remains some uncertainty around the anticipated introduction and adoption of biosimilars in 2023, our forecasting assumption based on the shift to biosimilars is expected to make a huge impact to the pharmacy benefit, moving from its normal double digit trend to a negative 0.8% and negative 3% trend in 2023 and 2024, respectively. Contributing to this trend is the reduction in unit cost across the board for the top specialty conditions. Most significant is the reduction in trend for Autoimmune: Anti-inflammatory drugs which will see a 13.3% decrease in gross PMPM spend in 2023, contingent on uptake of biosimilars.