Medicaid Pharmacy Trend Report

Page 1

2022 SEVENTH EDITION

EDITORIAL STAFF

Brooke Kachura

Senior Director, Marketing

CONTRIBUTORS

Meredith Delk, Ph.D., MSW

Senior Vice President, General Manager, Government Markets

Juanita Chapman Director, Analytics

Kristen Haloski, Pharm.D., AAHIVP Senior Director, Government PDL Markets

Kristin Haas Manager, Analytics

Katie Lockhart, MS Manager, Forecasting and Pharmacoeconomics

Karim Prasla, Pharm.D., MS, BCPS

Vice President, Clinical Outcomes, Advanced Analytics, and Research

Maryam Tabatabai Vice President, Clinical Information

Billy Thomas Senior Vice President, PDL and Drug Rebate Operations

Eileen Zimmer, Pharm.D., MBA Senior Director, Government PDL Markets

EXTERNAL CONTRIBUTOR

Doug Brown, R.Ph., MBA

Senior Vice President, Value and Access Coeus Consulting Group

© 2022 Magellan Rx Management. Magellan Rx Management 2022 Medicaid Trend Report™ is published in conjunction with D Custom. 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 Medicaid Trend Report™, © 2022. Used with permission.

1 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
OF
TABLE
CONTENTS
07 Medicaid Fee-forService Trends 17 Methodology 18 Glossary 08 Class and Drug Trends 02 Introduction 11 Key Therapeutic Classes by Net Dollar Impact 16 Pipeline and Forecasting 03 Key Trends and Insights 05 Medicaid Pharmacy Economics: Foundational Background

As the nation emerges from intense management of COVID-19, states and Medicaid agencies will again focus their efforts on other pressing issues in the coming years, including paying for curative therapies and high-cost drugs, addressing the opioid epidemic and challenges with mental health resources, and reducing the incidence of infectious disease. 2021 was a dynamic year for our Medicaid space. We saw the overall trend hit double digits for the first time in the history of the Medicaid Pharmacy Trend Report. As we look ahead, we predict this trend to mitigate as the launches of key biosimilars and generics accelerate.

For the second year in a row, we saw specialty drugs account for more than half of total drug spend, while still only accounting for 1.3% of pharmacy utilization. While we have seen similar top drug spend classes in previous years, vaccines — namely those for COVID-19 — is now a top 50 net spend class. Although COVID relief funds have covered many of these expenses to this point, the future management and state responsibility for these products remains to be seen.

In 2021, states continued to explore and implement efforts to counterbalance the increasing cost of specialty drugs with unique payment models, including subscription and outcomes-based contracting models. Each year, additional Medicaid programs have taken the necessary steps to gain CMS approval for these arrangements, and outcomes-based contracting remains a common

theme when states convene at Medicaid Pharmacy Administration Meetings. These approaches, while still early in their lifecycle, are critical tools that states must use if they want to move the conversation away from volume to toward value.

In this year’s report, we once again track the top classes and individual drugs by spend and those driving trend, with a deep dive into the top 10 classes driving trend that highlights why those classes had the largest impact on the Medicaid program. New this year, we have ranked the top 50 classes by percent of net spend while comparing 2020 to 2021. This view provides the reader with a more global view of the classes that are impacting the Medicaid drug spend.

The Medicaid Pharmacy Economics section, included in every issue of this report, provides a foundational background for new readers and those needing a refresher on the calculus of the federal rebate and the impact rebates have on the net price of drugs in the Medicaid program.

Thank you for your continued interest in the Medicaid Pharmacy Trend Report. We are confident the information contained in this report will drive important conversations and strategic opportunities to assist in managing Medicaid pharmacy programs in the coming years.

2022 / MAGELLANRX.COM/TRENDREPORT 2
Rx Management is
to present the 7th
of the
the gross and net drug spend trend across Medicaid programs. FIGURE 1: 6-YEAR NET COST PER CLAIM TREND 2016-2021
TOP
CLASSES BY NET SPEND 2021* Traditional Specialty Overall Trend HIV/AIDS Antipsychotics Hemophilia Treatment Anticonvulsants Cystic Fibrosis, Oral Other 10.0% 8.4% 7.2% 6.3% 62.6% 5.5% 2016 20.5% -5.1% 1.9% 2017 4.6% -9.7% -4.4% 2018 6.1% -2.6% 0.8% 2019 8.6% -0.4% 4.3% 2021 13.0% 5.8% 11.0% 2020 10.9% 1.7% 8.9% 0 0
*See
for Top
Drug Classes
INTRODUCTION Magellan
excited
edition
Medicaid Pharmacy Trend Report. This annual publication offers insight into
FIGURE 2:
5
The top drug classes in Medicaid programs across the country remained almost identical as previous years. The top two drug classes remained HIV/AIDS and antipsychotics, accounting for 18.4% of the total net drug spend and, similar to last year, the top 5 classes accounted for almost 40% of total net spend.
page 10
50
by Net Spend.

Overall Drug Cost Trends

In 2021, there was a 9.4%, or $12.24, increase in the gross cost per claim and a 11.0%, or $5.81, increase in the net cost per claim. As in the previous two years, 2021 saw another 2-plus percentage-point increase in the specialty trend, which topped out at 13.0%, up from 10.9% in 2020. Traditional drug net trend broke its long negative streak in 2020, lifting 2.1 percentage points from the previous year to inch into the positive at 1.9%. 2021 brought the trend to 5.8%, up 4.1 percentage points from 2020. Taken together, the traditional and specialty trends drove a double-digit overall trend (11%) for the first time since the inception of this report.

FIGURE 5: GROSS COST PER CLAIM 2020-2021

2020 2021 % Change $132.86 Q1

$123.79 $142.09 Q2

$139.87 Q3

$131.12 $142.89 Q4

FIGURE 6:

COST PER CLAIM 2020-2021

$132.61 $143.77 Weighted Average

$129.93 $142.18

3 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022 $52.74 KEY TRENDS AND INSIGHTS
Trends
OVERALL COST TRENDS
2021 TREND IN NET SPEND 2020 2021 % Change $142.18 Gross Cost per Claim $129.93 Net Cost per Claim $58.55 11.0% Overall Trend 5.8% Traditional Trend $1.49 2.4% Cost Trend Utilization Trend 13.0% Specialty Trend $272.95 5.1% Cost Trend Utilization Trend 9.4% 11.0%
Overall
FIGURE 4:
2020-2021 FIGURE 3:
14.8% 5.3% 9.0% 8.4% 9.4%
13.0%
13.8% 12.8% 11.0%
NET
2020 2021 % Change Q1 Q2 Q3 Q4 Weighted Average $49.10 $53.98 $53.28 $54.96 $52.74 $55.46 $55.90 $60.62 $62.02 $58.55
3.6%

Traditional vs. Specialty Impact

2022 / MAGELLANRX.COM/TRENDREPORT 4
KEY TRENDS AND INSIGHTS
specialty
Traditional Specialty
7: CLAIM VOLUME 1.3% 98.7% 2020 1.3% 98.7% 2021 Traditional Specialty FIGURE 8: TOTAL NET COST 48.5% 51.5% 2020 53.8% 46.2% 2021
10: SPECIALTY COST TREND 2020 2021 % Change $4,530.63 $2,365.85 Gross Cost per Claim Net Cost per Claim $4,176.86 $2,092.90 8.5% 13.0%
TRADITIONAL COST TREND 2020 2021 % Change $82.91 Gross Cost per Claim $76.69 8.1% $27.39 Net Cost per Claim
5.8%
Last year we reported that, as predicted,
net cost exceeded 50% of total net drug spend in Medicaid fee-for-service. This year, that growth has accelerated, growing 2.3 percentage points, from 51.5% in 2020 to 53.8% in 2021. Consistent with previous years, specialty utilization was again just 1.3% of total utilization.
FIGURE
FIGURE
FIGURE 9:
$25.90

The Medicaid pharmacy pricing landscape remains largely unchanged over the six years Magellan Rx has produced this report. The basic tenet of the program is the same: Manufacturers agree to a base (or “federal”) rebate in exchange for mandatory pharmacy coverage for their products by states that provide the Medicaid pharmacy benefit. All states and the District of Columbia currently offer this benefit to Medicaid recipients. Hence, manufacturers gain “payable” status everywhere through this agreement with the Centers for Medicare and Medicaid Services (CMS). Medicaid rules also permit additional, or “supplemental,” rebates to be contracted by individual states or a group of states to further reduce the net cost of pharmaceuticals. These contracts are protected by Medicaid’s best price exemption, which means they do not impact the manufacturer’s Medicaid best price. The pharmacy benefit is included in the Federal Medical Assistance Percentage (FMAP), so states share supplemental rebates as they do federal rebates with the federal government. The other rebate factor in the equation, the rebate offset amount, continues to go entirely to the federal government and constitutes a small portion, roughly 2.4%, of total drug spend. In 2021, the average total discount inclusive of ROA was 58.8% (52.9% federal and 5.9% supplemental).

PHARMACY ECONOMICS

Key Points in Medicaid Economics

» Net drug cost is calculated net of federal, supplemental, and the rebate offset amount.

» States do not chase supplemental rebates at the expense of lowest net cost or federal rebates.

» Brand drugs can be less expensive than their generic equivalents and can save states millions of dollars annually.

The Economics

To understand Medicaid economics at the drug level, assume pharmacy reimbursement, wholesale acquisition cost (WAC), and average manufacturer price (AMP) are all the same. A new brand drug enters the market with a minimum mandatory rebate of 23.1% of AMP. This drug enters a competitive class with three clinically equivalent therapeutic alternatives, each with higher discounts and lower net costs than the new drug. With a pharmacy reimbursement cost of $100, the net cost to the state is $76.90 ($100 minus 23.1%, or $23.10). To be competitive, the manufacturer of the new brand will offer an additional discount, known in Medicaid as a “supplemental rebate,” to lower the net

cost from $76.90 to a competitive price of $50. The value of the supplemental rebate at time zero is thus equal to $26.90 and the total discount is 50%, or $50. As time progresses, manufacturer pricing actions drive the total discounts up. Still, due to the inverse relationship between supplemental and federal rebates, supplemental discounts decline over time as the total federal discount increases (see figure 11). As the patent expiration approaches, the manufacturer generally increases the cost of the drug, and the CPI-U penalty accelerates the growth of the federal rebate in the quarters just prior to that event.

5 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
PHARMACY
MEDICAID
ECONOMICS: FOUNDATIONAL BACKGROUND
Time Brand Drug Price $100.00 $50.00 $23.10 New Drug Introduction Patent Expiration/ Generic Introduction Generic Federal Rebate 13.0% AMP + CPI-U Penalty State Net Drug Cost Generic Drug Price Brand Federal Rebate Greater of (23.1% AMP or AMP – Best Price) + CPI-U Penalty Supplemental Rebate State Net Drug Cost FIGURE 11:
FIGURE XX: MEDICAID
MEDICAID PHARMACY ECONOMICS

MEDICAID PHARMACY ECONOMICS: FOUNDATIONAL BACKGROUND

Generic Impact

In the months and even years after patent expiration, brand drugs can be significantly less expensive to states than their generic counterparts net of all federal rebates. States that opt to take advantage of a brand less than generic strategy save millions of dollars each year. In 2021, states included in this report saved $486 million, or $74.74 per claim, using a brandover-generic strategy. The top five brand-over-generic drugs — Symbicort, Suboxone, Proair HFA, Concerta, and Advair Diskus — accounted for 65% of total brand-over-generic savings.

Generic Utilization Rate

Medicaid fee-for-service (FFS) programs most often reported lower generic utilization rates than Medicaid MCO or other commercial programs due to the impact of the federal rebate on the net cost of brand drugs compared to their generic equivalents. The CMS calculation of generic efficiency requires states to classify brand and generic drugs not by their formal label name, but by their CMS drug class indicator. These indicators are single-source, innovator multisource, or noninnovator multisource. The impact to FFS is significant because authorized generics (AGs) that have a non-innovator multisource (generic) label name pay an innovator multisource (brand)

federal rebate and are thus counted as brand drugs by CMS. In 2021, states averaged an 86.0% effective generic dispensing rate (GDR) when defined as drugs that do not have a proprietary drug name and where Authorized Generics count as generic even though they pay a brand like CMS rebate.

FIGURE 12: GENERIC UTILIZATION RATE 2020-2021

2020 86.3% 2021 86.0%

Medicaid Forecasting

MRx Predict is Magellan Rx Management’s advanced analytics platform supporting various predictive analytics solutions. Predictive Medication Adherence and Predictive Opioid Misuse tools proactively identify at-risk patients and individually stratify them based on the probability of being nonadherent to chronic medications or misusing opioid therapies, respectively. Medicaid forecasting data can be found on page 16

Our Drug Cost Planner tool provides predictions on drug spend and trend while also detailing the factors driving those future trends, allowing clients to prepare for future events such as pipeline launches and patent expirations. Drug Cost Planner predicts that overall gross trend will drop precipitously next year and then remain relatively constant over the next several years, trending between 3.0% and 3.5%. Overall net cost will have peaked in 2021 at 11.0% and is predicted to drop to 6.2% next year and then trend between 3% and 4% through 2023 and 2024. Rebates will continue to help offset increasing drug prices, but the full impact of inflation on the CPI-U component of the federal rebate will not be seen until next year’s report.

Gross/Rx Net Net/Rx 9.4% 5.8% 11.0% 4.6%

$129.93 $58.55

3.3% 6.2%

$142.18 $62.20

3.1% 3.4%

$146.81 $64.31

$52.74

FIGURE 13: MEDICAID FORECASTING 2021 2022 2023 2020 2024

3.0% 3.3%

$151.35 $66.42

$155.88

/ MAGELLANRX.COM/TRENDREPORT 6
2022

MEDICAID FEE-FOR-SERVICE TRENDS

Federal Rebate Update

2021 saw a significant decrease in the aggregate federal rebate percentage inclusive of the rebate offset amount (ROA), from 54.5% in 2020 to 52.9% in 2021. This is a continuation of a trend we identified two years ago, after several years of increases to the federal rebate. The decline, which was driven by new specialty drugs, was significantly offset by a corresponding 1.5% rise in specialty supplemental rebates. On closer inspection, the federal rebate on traditional drugs increased just 0.1 percentage point in 2021, compared to 2020’s 1.9 percentage-point increase, while the federal rebate on specialty drugs continued to decline, falling another 3.9 percentage points from 46.1% down to 42.2%, following 2020’s 2.6 percentage-point decline. Considering new drugs to market start with a federal rebate of 23.1% of AMP, higher utilization of newer products is likely pulling down the average specialty federal rebate. Given the growth in specialty spend, up 2.3 percentage points, we anticipated the continued decline in total rebate but expected it to be on par with previous years. However, 2021 saw the total rebate, net of federal, supplemental, and ROA, fall 1.6 percentage points year over year — a dramatic decline from previous years.

Not included in this discussion is the impact of the CPI-U penalty on the calculation of the Federal rebate. It is beyond the scope of this report to calculate the direct impact of the CPI-U on the overall federal rebate, but with inflation running at more than 7% in 2021, according to the Federal Reserve Bank of St. Louis, it would be hard to imagine that a higher CPI-U would not translate to a lower federal rebate.

On a positive note, total supplemental rebates, driven by specialty drugs, increased a full 1 percentage point from 4.9% to 5.9% as a percent of gross spend. Remember, supplemental rebates have an inverse relationship to the federal rebate when contracted at a guaranteed net unit price or GNUP. Supplemental rebates are collected on top of the mandatory federal rebate bringing the total Medicaid rebate (inclusive of ROA) to 58.8%, which is just 0.6 percentage points lower than last year.

FIGURE 14: FEDERAL REBATE PERCENTAGE BY SEGMENT

7 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
*Federal rebate as a percent of pharmacy reimbursement and net of ROA The average federal rebate can be subdivided
generic drugs. As
Specialty 46.1% Traditional 64.8% Federal Rebate* 54.5% Brand 66.3% Generic 10.7% 2020 Specialty 42.2% Traditional 64.9% Federal Rebate* 52.9% Brand 63.8% Generic 10.4% 2021
as either specialty and traditional drugs or brand and
noted earlier, the growth in specialty net spend was the primary driver of lower average federal rebate in 2021.

Therapeutic Class Net Dollar Impact

Cytokine and CAM antagonists and hemophilia treatment were the two classes with the highest net dollar impact against the 2021 trend, adding $0.93 and $0.61, respectively. Surprisingly, immunomodulators, atopic dermatitis emerged as a trend driver for states by adding $0.40 while moving from 2020’s 15th-most expensive class to 2021’s 10th-most expensive class over the period. Antivirals, oral and stimulants and related agents saw the largest decreases in net trend — -$0.17 and -$0.08, respectively — helping to mitigate the overall increase in net trend, which has now reached double-digits for the first time since this report’s inception. These key therapeutic classes are discussed in greater detail starting on page 11

Drug Net Spend Impact

FIGURE 17: 2021 TOP 10 SPECIALTY DRUGS BY PERCENT OF TOTAL NET SPEND

2022 / MAGELLANRX.COM/TRENDREPORT 8 1.6% Vraylar (oral) 0.5% Gabapentin Capsule (oral) 0.6% Amphetamine Salt Combo (oral) 0.6% Vimpat Tablet (oral) 0.7% Abilify Maintena (IM) 0.8% Rexulti (oral) 1.2% Dupixent Syringe (SQ) 1.3% Epidiolex (oral) 1.3% Suboxone Film (SL) 1.5% Invega Sustenna (IM) Hypoglycemics, SGLT2
INCREASING
TOP 5 CLASSES WITH DECREASING TOTAL NET SPEND
DOLLAR IMPACT
FIGURE 15: TOP 5 CLASSES WITH
TOTAL NET SPEND BY DOLLAR IMPACT 2021 Traditional Specialty FIGURE 16:
BY
2021 Traditional Specialty
Antivirals, Oral Stimulants and Related Agents Anesthetics, Topical Anticoagulants $-0.04 $ 0.04 $ 0.07 $ 0.08 $-0.17
CLASS AND DRUG TRENDS
drugs
When looking at individual net drug spend as a percent of total net spend, six specialty drugs and five traditional
each account for more than 1% of total net drug spend. Together, these 11 drugs account for 21.9% of total net drug spend or $1.2B of the $5.6B total net spend.
Cytokine and CAM Antagonists $0.93 Spinal Muscular Atrophy $0.30 Cystic Fibrosis, Oral $0.26 Immunomodulators, Atopic Dermatitis $0.40 Hemophilia Treatment $0.61 4.4% Biktarvy (oral) 0.8% Triumeq (oral) 0.8% Ibrance Tablet (oral) 0.9% Evrysdi (oral) 0.9% Eloctate (IV) 1.1% Genvoya (oral) 1.4% Mavyret (oral) 1.4% Stelara Syringe (INJ) 2.6% Hemlibra (SQ) 4.3% Trikafta (oral)
FIGURE 18: 2021 TOP 10 TRADITIONAL DRUGS BY PERCENT OF TOTAL NET SPEND

CLASS AND DRUG TRENDS

2021 Top 10 Traditional and Specialty Drugs Driving Trend by Net Dollar Impact Change

9 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022 $-0.14 $ 0.19 Methylphenidate ER (Concerta) (oral) Ibrance Capsule (oral) $-0.04 $-0.06 Chlorpromazine (oral) Descovy (oral) $-0.04 $ 0.07 Fluticasone/ Salmeterol (Advair) (AG) (INH) Truvada (oral) $-0.04 $ 0.07 Lidocaine (topical) Triumeq (oral) $ 0.05 $-0.09 Nuvakaan (topical) Symdeko (oral) $ 0.05 $-0.09 Saphris (SL) Advate (IV) $ 0.05 $-0.11 Paliperidone (AG) (oral) Genvoya (oral) $ 0.05 $-0.11 Amphetamine Salt Combo ER (AG) (oral) Orkambi Tablet (oral) $-0.12 $-0.13 Latuda (oral) Spinraza (IT) $ 0.13 $-0.15 Oseltamivir Suspension (oral) Epclusa (oral)
The specialty class had a higher per-drug impact than traditional, with six of the top 10 specialty drugs — Hemlibra, Trikafta, Evrysdi, Biktarvy, Stelara, and
drug
Vraylar
top
specialty drugs
TOP
DRUGS INCREASING DRUG
SPECIALTY DRUGS INCREASING DRUG
20: TOP 10 TRADITIONAL DRUGS DECREASING DRUG TREND
TOP 10 SPECIALTY DRUGS
$0.65 Vraylar
Hemlibra
$0.05 $0.09 Caplyta
Suboxone
$0.06
Focalin
$0.07 $0.26 Moderna
Ibrance
$0.08 $0.36 Rufinamide
Stelara
$0.10 $0.38 Trulicity
Biktarvy
$0.46
Evrysdi
$0.50
Trikafta
Ibrance — having a higher
trend than
on the traditional side. Four of the
six
belong to key therapeutic classes that had a positive net dollar impact and will be discussed further in the next section. FIGURE 19:
10 TRADITIONAL
TREND FIGURE 21: TOP 10
TREND FIGURE
FIGURE 22:
DECREASING DRUG TREND $0.18
(oral)
(SQ)
(oral) Sofosbuvir/ Velpatasvir (AG) (oral) $0.06 $0.09
Film (SL) Taltz Autoinjector (SQ) $0.06 $0.10 Ondansetron ODT (oral) Cosentyx Pen Injecter (SQ)
$0.13
XR (oral) Mavyret (oral)
Covid-19 Vaccine
Tablet (oral)
Suspension (oral)
Syringe (INJ)
(SQ)
(oral) $0.11
Amphetamine Salt Combo (oral)
(oral) $0.14
Pfizer COVID-19 Vaccine
(oral)

CLASS AND DRUG TRENDS

FIGURE 23: TOP 50 DRUG CLASSES BY NET SPEND

RANK 2021 RANK 2020 RANK CHANGE CLASS % OF TOTAL NET SPEND 2020

NET SPEND % CHANGE 1 1 HIV/AIDS 10.8% 10.0% 2 2 Antipsychotics 9.2% 8.4% 3 3 Hemophilia Treatment 6.9% 7.2% 4 4 Anticonvulsants 6.6% 6.3% 5 5 Cystic Fibrosis, Oral 5.6% 5.5% 6 7 Cytokine and CAM Antagonists 3.0% 4.3% 7 6 Stimulants & Related Agents 3.3% 2.8% 8 8 Opiate Dependence Treatments 2.6% 2.7% 9 9 Hepatitis C Agents 1.9% 1.8% 10 15 Immunomodulators, Atopic Dermatitis 1.2% 1.8% 11 10 Oncology, Oral: Hematologic 1.6% 1.6% 12 13 Oncology, Oral: Breast 1.4% 1.5% 13 16 Spinal Muscular Atrophy 1.1% 1.5% 14 11 Antidepressants, Other 1.5% 1.5% 15 12 Neuropathic Pain 1.4% 1.4% 16 14 Antidepressants, SSRIs 1.3% 1.3% 17 17 Movement Disorders 1.0% 1.0% 18 18 Immune Globulins 1.0% 0.9% 19 19 PAH Agents, Oral & Inhaled 0.9% 0.9% 20 23 Proton Pump Inhibitors 0.8% 0.9% 21 22 Angiotensin Modulators 0.8% 0.9% 22 20 Bronchodilators, Beta Agonist 0.9% 0.9% 23 24 NSAIDs 0.8% 0.8% 24 27 Multiple Sclerosis Agents 0.7% 0.8% 25 21 Analgesics, Narcotics Short 0.9% 0.8%

% OF TOTAL NET SPEND 2021

RANK 2021 RANK 2020 RANK CHANGE CLASS % OF TOTAL NET SPEND 2020

NET SPEND % CHANGE 26 35 Duchenne Muscular Dystrophy 0.6% 0.7% 27 25 Oncology, Oral: Renal Cell 0.7% 0.7% 28 36 Immunomodulators, Asthma 0.5% 0.7% 29 26 Antihistamines, Minimally Sedating 0.7% 0.7% 30 34 Oncology, Oral — Other 0.6% 0.7% 31 44 Antiemetic/Antivertigo Agents 0.5% 0.6% 32 33 Lipotropics, Statins 0.6% 0.6% 33 30 Mucopolysaccharidosis 0.6% 0.6% 34 31 Contraceptives, Other 0.6% 0.6% 35 32 HAE Treatments 0.6% 0.6% 36 29 Anxiolytics 0.6% 0.6% 37 38 Glucocorticoids, Oral 0.5% 0.6% 38 28 Laxatives and Cathartics 0.6% 0.6% 39 37 Beta-Blockers 0.5% 0.5% 40 130 Vaccines 0.1% 0.5% 41 39 Contraceptives, Oral 0.5% 0.5% 42 44 Skeletal Muscle Relaxants 0.5% 0.5% 43 41 Immunosuppressives, Oral 0.5% 0.5% 44 42 Oncology, Oral — Lung 0.5% 0.5% 45 46 Histamine LI Receptor Blocker 0.4% 0.4% 46 47 Cephalosporins & Related Antibiotics 0.4% 0.4% 47 49 Urea Cycle Disorders, Oral 0.4% 0.4% 48 50 Antihistamines, First-Generation 0.4% 0.4% 49 45 Thyroid Hormones 0.5% 0.4% 50 48 Diuretics 0.4% 0.4%

% OF TOTAL NET SPEND 2021

2022 / MAGELLANRX.COM/TRENDREPORT 10
Traditional Specialty

Cytokine and CAM Antagonists

$92.3M

Net Spend Trend

Class Summary

Cytokine and cell adhesion molecule (CAM) antagonists was the No. 6 net spend category in 2021 and had the largest impact to net cost per claim. Net dollar impact was driven by Stelara syringe, which had a 35.3% increase in claim volume accounting for a $0.36 net dollar impact, while the Humira pen kit continued to capture the largest market share.

FIGURE 24: MARKET SHARE AND NET DOLLAR IMPACT

Hemophilia

Net Dollar Impact $0.61

Net Spend Trend

$66.9M Total Net Spend Trend

Class Summary

19.8% Claim Volume Trend

12.3% Net Cost Per Claim Trend

6.7%

Hemophilia was the No. 3 net spend category in 2021 and has maintained this rank annually since 2017. Net dollar impact went from negative in 2020 to $0.61 in 2021 and was driven by Hemlibra, which continues to have the largest market share in the class and utilization, which increased 41.3% from 2020 to 2021.

FIGURE 25: MARKET SHARE AND NET DOLLAR IMPACT

Hemlibra (SQ) Alprolix (IV) Idelvion (IV) Advate (IV) Adynovate (IV) Eloctate (IV) Humate-P kit (IV) Other 0

Market Share

11 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
27.3%
5.2% 5.0% 13.0% 10.1% 5.1% 5.2% 5.5% 5.4% 11.0% 9.5% 4.4% 28.2% 4.7% 26.1%
Net Dollar Impact Change $0.01 $0.02 $-0.01 $-0.01 $0.65 $0.08 $-0.09 $-0.03
34.4%
2021
2020 2021
Total Net Spend Trend 62.9% Claim Volume Trend 19.9% Net Cost Per Claim Trend 35.8%
2021 2020 2021 4.0% 6.2% 9.6% 7.9% 41.0% 4.6% 3.4% 23.3% 4.5% 6.1% 9.0% 6.4% 42.3% 4.6% 3.1% 24.1% $0.45 $0.36 $0.10 $0.00 $0.02 KEY THERAPEUTIC CLASSES BY NET DOLLAR IMPACT
Stelara syringe (INJ) Cosentyx pen injector (SQ) Otezla (oral) Enbrel pen (INJ) Humira kit (INJ) Humira pen kit (INJ) Xeljanz (oral) Other Market Share Net Dollar Impact Change Net Dollar Impact $0.93

KEY THERAPEUTIC CLASSES BY NET DOLLAR IMPACT

Immunomodulators, Atopic Dermatitis

Net Dollar Impact $0.40

$39.6M

Net Spend Trend

Class Summary

Immunomodulators, atopic dermatitis emerged as a positive trend driver and was 2021’s No. 10 net spend class. Positive net dollar impact can be attributed to increased utilization and market share of the Dupixent pen and syringe, with shifts away from Eucrisa, Elidel, and its authorized generic.

FIGURE

26: MARKET SHARE AND NET DOLLAR IMPACT

Dupixent syringe (SQ) Eucrisa (topical) Protopic (topical) Elidel (topical) Dupixent Pen (SQ) Tacrolimus (topical) Pimecrolimus (AG) (topical) Other Market Share Net Dollar Impact Change

Spinal Muscular Atrophy

Net Dollar Impact $0.30

Net Spend Trend

$30.5M Total Net Spend Trend

Class Summary

57.9% Claim Volume Trend

424.8% Net Cost Per Claim Trend

-69.9%

Spinal muscular atrophy was the No. 13 net spend class in 2021. Although there are only three products in the class, claim volume increased by 425%, driven by the oral product Evrysdi, which had a large increase in utilization, and a shift in market share away from Spinraza.

FIGURE 27: MARKET SHARE AND NET DOLLAR IMPACT

Evrysdi (oral) Spinraza (IT) Zolgensma (IV)

Net Dollar Impact Change

2022 / MAGELLANRX.COM/TRENDREPORT 12
0.7%
59.7% 5.2% 7.7% 2021
$0.46 $-0.02 $-0.13 35.1% 91.7%
Market Share
2020
0
2021
Total Net Spend Trend 67.6% Claim Volume Trend 26.3% Net Cost Per Claim Trend 32.7%
2021 2020 2021 29.0% 29.5% 25.9% 22.0% 3.2% 2.7% 2.9% 10.3% 14.4% 16.0% 21.8% 0.7% 1.6% 2.5% 2.4% 15.2% $-0.01 $0.24 $0.17 0

Cystic Fibrosis, Oral

Class Summary

Cystic fibrosis, oral, was the No. 5 net spend class and the No. 5 positive trend driver in 2021. There was an 11% increase in claim volume due to a 27% increase in utilization of Trikafta, which has the majority of market share in the class.

Anticoagulants, Oral Class Summary

28: MARKET SHARE AND

DOLLAR IMPACT

FIGURE 29: MARKET SHARE AND NET DOLLAR IMPACT

13 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
$31.6M Total Net
Claim
Net
Net Spend Trend
Spend Trend 11.4%
Volume Trend 10.8%
Cost Per Claim Trend 0.5%
Market
0 2021 67.1% 7.5% 6.1% 8.0% 8.3% 2020 2021 77.2% 7.2% 4.3% 4.8% 3.6% 2.9% 3.0% $0.50 $0.01 $0.01 $-0.09 $-0.05 $-0.11
KEY THERAPEUTIC CLASSES
NET
$-0.01 $-0.03 0 0.2% 0.3% 0.8% 0.5% 0.4% 0.5% 1.5% 1.3%
FIGURE
NET
Trikafta (oral) Orkambi packet (oral) Symdeko (oral) Kalydeco tablet (oral) Orkambi tablet (oral) Kalydeco packet (oral)
Share Net Dollar Impact Change
Net Dollar Impact $0.26
BY
DOLLAR IMPACT
Anticoagulants, oral, was the fifth-largest negative net trend driver in 2021. The net cost per claim for agents in this class decreased by 35.2%, while the claim volume increased by 1.4%. Net Spend Trend $-3.4M Total Net Spend Trend -34.3% Claim Volume Trend 1.4% Net Cost Per Claim Trend -35.2%
Eliquis (oral) Xarelto (oral) Warfarin (oral) Enoxaparin Syringe Pradaxa (oral) Enoxaparin Sodium Vial Xarelto Dose Pack (oral) Other Market Share Net Dollar Impact Change 2021 2020 2021 37.4% 42.7% 24.3% 23.7% 9.0% 8.8% 26.4% 22.3% Net Dollar Impact $-0.04

DOLLAR IMPACT

Hypoglycemics, SGLT2 Inhibitors

Net Dollar Impact $-0.04

Class Summary

Hypoglycemics, sodium-glucose cotransporter 2 (SGLT2) inhibitors, was a negative trend driver in 2021 due to many products in the class having a high federal rebate, resulting in lower net cost for the class. The SGLT2 inhibitors have many indications for use, including improving glycemic control in adults with type 2 diabetes mellitus (T2DM), reducing the risk of cardiovascular death in adults with T2DM, and reducing the risk for cardiovascular death and hospitalization for patients with heart failure. Claim volume for agents in this class increased 39.8% from 2020 to 2021.

FIGURE 30: MARKET SHARE AND NET DOLLAR IMPACT

Anesthetics, Topical

Class Summary

Anesthetics, topical, was the third-largest negative net spend class in 2021, which can be attributed to decreases in net spend and net cost per claim.

FIGURE

31: MARKET SHARE AND NET DOLLAR IMPACT

Lidocaine/Prilocaine cream (topical) Lidocaine HCL ointment (topical) Lidocaine patch OTC (topical) Lidocaine HCL cream OTC (topical) Lidocaine HCL cream (topical) Aspercreme OTC (topical) Lidotral (topical) Other Market Share Net Dollar Impact Change

2022 / MAGELLANRX.COM/TRENDREPORT 14
Total Net
Claim
Net Spend Trend $-4.2M
Spend Trend -70.2%
Volume Trend 39.8% Net Cost Per Claim Trend -21.7%
Jardiance
Farxiga (oral) Invokana (oral) Xigduo XR (oral)
Market Share Net Dollar Impact Change 2021 2020 2021 51.6% 54.8% 25.6% 29.5% 18.4% 11.5% $-0.01 $-0.03 0 0.6% 0.6% 0.6% 0.8% 0.6% 0.8% 0.9% 0.9% 1.5% 1.3%
NET
(oral)
Synjardy (oral) Steglatro (oral) Synjardy XR (oral) Other
KEY THERAPEUTIC CLASSES BY
Spend Trend
Total Net Spend Trend -55.0% Claim Volume Trend
Net Cost Per Claim Trend
Net
$-6.4M
10.2%
-59.1%
Net Dollar Impact $-0.07
2021 2020 2021 37.4% 33.1% 38.8% 32.1% 4.1% 3.6% 3.3% 5.0% 21.0% 8.4% 7.4% $-0.03 $-0.05 $0.01 0 2.3% 0.7% 1.5% 0.7% 0.8%

Stimulants and Related Agents

Net

Class Summary

Stimulants and related agents was the No. 7 net spend class; however, it was a negative trend driver in 2021. This can be attributed to an 8.1% decline in the average net cost per claim, driven in part by more than 50% declines in both utilization and cost per claim of Methylphenidate ER (Concerta) (oral).

FIGURE 32: MARKET SHARE AND NET DOLLAR IMPACT

Antivirals, Oral

Net Dollar Impact $-0.17

Class Summary

Antivirals, oral, was the No. 1 negative net trend driver, primarily due to a 46% decline in claim volume and 35% reduction in net cost per claim. Most notably, utilization and market share of both oseltamivir capsule and suspension declined in 2021.

FIGURE 33: MARKET SHARE AND NET DOLLAR IMPACT

Valacyclovir (oral) Acyclovir tablet (oral) Oseltamivir capsule (oral) Oseltamivir suspension (oral) Acyclovir capsule (oral) Acyclovir suspension (oral) Famciclovir (oral) Other Market Share Net Dollar Impact Change

15 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
Net Spend Trend $-3.9M Total Net Spend Trend -2.4% Claim Volume Trend 6.2% Net Cost Per Claim Trend -8.1%
Market Share
2021 2020 2021 18.6% 15.9% 18.7% 15.2% 5.8% 6.7% 5.0% 23.5% 5.1% 5.7% 8.1% 28.7% 9.2% 10.9% 12.6% 10.3% $0.11 $0.06 $-0.04 $-0.22 $-0.02 $0.02 0 $0.01 $-0.01
Dollar Impact $-0.08 Vyvanse capsule (oral) Amphetamine salt combo (oral) Adderall XR (oral) Guanfacine ER (oral) Concerta (oral) Focalin XR (oral) Atomoxetine (oral) Other
Net Dollar Impact Change
KEY THERAPEUTIC CLASSES BY NET DOLLAR IMPACT
Net Spend Trend $-16.1M Total Net Spend Trend -65.0% Claim Volume Trend -45.9% Net Cost Per Claim Trend -35.2%
2021 2020 2021 32.5% 64.2% 14.1% 24.1% 6.3% 16.9% 3.3% 2.6% 27.1% 1.5% 1.2% 0.4% $0.02 $-0.02 $-0.04 $-0.13 0 2.2% 0.8% 0.2%

PIPELINE AND FORECASTING

Pharmacy Pipeline

Notable agents that are further from approval have been identified in Figure 34. These are products with the potential for significant clinical and financial impact. Their development status is being tracked on the MRx Pipeline radar. These pipeline products, their respective class or proposed indication, as well as an estimated financial forecast for the year 2026, are displayed. The financials are projected total annual US sales, reported in millions.

Key Conditions Forecast

The largest and most impactful classes are anticipated to continue to trend upward over the next three years, as they have in previous years. Mature classes such as stimulants and related agents and glucocorticoids, inhaled, are trending down as generic utilization increases and downward pricing pressure continue to lower the total net cost for drugs in these classes. Anticipated biosimilars in the cytokine and CAM antagonist class will contribute to lower growth in the coming years.

FIGURE 35: KEY CONDITIONS FORECAST

FIGURE 34: KEEP ON YOUR RADAR

zuranolone Behavioral health $678 tabelecleucel Oncology $316

adagrasib Oncology $881

tiragolumab Oncology $785

dextromethorphan/ bupropion Behavioral health $812

donanemab Neurology $1,887

resmetirom Cardiovascular $548

nirsevimab Infectious disease $411

mirikizumab Immunology $687

lenadogene nolparvovec (GS-010) Ophthalmology/Gene therapy $59

exa-cel (CTX001) Hematology/Gene therapy $949

fidanacogene elaparvovec Hematology/Gene therapy $267

gantenerumab Neurology $1,836

giroctocogene fitelparvovec Gene therapy/Hematology $205

 Specialty drug names appear in magenta throughout the publication.

1 MRx Pipeline Report. https://issuu.com/magellanrx/docs/mrx_pipeline_jul_2022_mrx1119_0722

36% 19% 13%11% 7% 10% 6% 6%

Hemophilia Treatment Glucocorticoids, Inhaled

Opiate Dependence Treatments

Hypoglycemics, Incretin Mimetics/ Enhancers

16
2022 / MAGELLANRX.COM/TRENDREPORT
For more detailed information on the pipeline, please see the latest MRx Pipeline Report on our website.1
2021 2022 2023 2024 Cytokine and CAM Antagonists 9% 9% 7% 7% 2% 106% 53% 7% 7% 7% 4% 4% Stimulants and Related Agents -8% -2% -8% -8% -17% -23% -50% -102% HIV/AIDS Anticonvulsants Antipsychotics Hypoglycemics, Insulin and Related Agents 7% 1% 0% 0% -2% 1% 1% -6% 10% 0% 0% -1%

METHODOLOGY

The MRx Medicaid Trend report focused exclusively on Medicaid FFS drug spend and does not include managed care utilization. It provides a comprehensive year-over-year analysis of Medicaid FFS pharmacy claims data on a cost per claim basis.

» The report trends are based on gross cost and net cost per claim basis and compared the 2020 calendar year data to the 2021 calendar year data.

» The data set used in this evaluation contains more than 95 million claims with a gross cost of $13.6 billion and a net cost of $5.6 billion.

» Data was obtained from 25 Medicaid FFS clients across the country from which two years of complete FFS data are available. Claims data used in this report is publicly available on the CMS website: https://www.medicaid.gov/medicaid/prescription-drugs/ state-drug-utilization-data/index.html

» Similar to commercial plans, both traditional and specialty drug trends are not immune to manufacturer price actions at the gross cost level; however, the increase at the net cost level is somewhat mitigated by supplemental rebates (where applicable) and the CPI penalty component of the federal rebate.

» To achieve the highest level of accuracy for the Medicaid FFS space, this report again incorporates the CMS federal rebate data for both 2020 and 2021. Federal rebate data at the drug level is confidential and protected by federal law under the Social Security Act at 42 U.S.C. 1396r-8 (b)(3)(d). Therefore, this report does not disclose net cost pricing information on a per drug basis.

MRx Pipeline Report today!

MRx PIPELINE

PIPELINE

For a downloadable version (PDF) of this report or any of our other trend reports, please visit magellanrx.com.

17 MAGELLAN RX MEDICAID PHARMACY TREND REPORT / 2022
JANUARY 2022
x
A VIEW INTO UPCOMING SPECIALTY & TRADITIONAL DRUGS
A VIEW INTO UPCOMING SPECIALTY & TRADITIONAL DRUGS JULY 2022
MR
CONNECT WITH US TODAY! MAGELLANRX.COM MRx customer data used in analysis TX LA MS TN KY GA SC NC VA WV KS OK AR NM HI AZ NV OR ID ME NH MA VT PA MD WA MT ND SD NE MO MN WI IA IL IN OH MI WY UT CO CA RI CT NJ DE DC AK AL FL WV VA NY
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AMP average manufacturer price

CAM cell adhesion molecule

CMS Centers for Medicare & Medicaid Services

COVID-19 severe acute respiratory syndrome coronavirus

CPI-U Consumer Price Index for All Urban Consumers

ER extended release FFS fee-for-service

FMAP federal medical assistance percentage

GDR

generic dispensing rate

HIV/AIDS .......... human immunodeficiency virus/acquired immunodeficiency syndrome

INH

inhaled/inhalation INJ

injection IT intrathecal IV intravenous MCO managed care organization PDL Preferred Drug List ROA rebate offset amount SL sublingual SQ subcutaneous WAC

acquisition cost

2022 / MAGELLANRX.COM/TRENDREPORT 18
AG ............................................................................................................................................... authorized generic
.................................................................................................................................
..............................................................................................................................................
......................................................................................................................................................................
.......................................................................................................................... wholesale
XR....................................................................................................................................................extended release GLOSSARY
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