Medco is ringing alarms again about rising spending on certain meds. In its latest annual ‘Drug Trends’ report, the big PBM singles out diabetes and cancer treatments, citing new arrivals with high price tags as ominous signs for future health care costs.

Like so many others, Medco mislabels diabetes as an epidemic (no, Virginia, you can’t catch diabetes by sharing an ice cream sundae). Nonetheless, the growing number of diabetics could cause a 70 percent increase in spending on diabetes med between now and 2009. An aging population and more overweight people are to blame for increased spending forecast to rise 16 percent to 20 percent annually, as drug usage grow by 8 percent to 10 percent each year.

The report finds that diabetes treatments were the second leading contributor in total dollars to drug spending growth in 2006, trailing only cholesterol pills. Spending on diabetes treatments increased 14.5 percent from 2005 to 2006 and the use of diabetes drugs increased 5.1 percent.

Here’s Medco’s key message: New treatments are expected to drive unit costs higher as some newer drugs are increasingly prescribed as first-line therapy. The analysis projects that by 2009, spending on diabetes meds could grow by up to 68 percent from 2006.

This is the pitch from David Snow, Medco’s ceo: “The generic dispensing rate could exceed 60 percent this year acting as a countervailing measure to control pharmacy costs especially with our aging population, where use continues to rise.”

Of course, cancer meds are a different animal, but just as troubling to Snow and his team. Drug regimens run $5,000 to $10,000 a month, making these therapies the leading driver of higher costs with more expensive niche meds displacing older ones as standard treatment. Usage grew 8.6 percent while the growth in spending hit almost 38 percent.

Medco singles out Nexavar, Revlimid and Sutent, as big reasons for the sharp increase in the average cost of treatment. Many of the newer drugs supplement existing cancer treatments, a factor that could also boost usage in coming years. Almost 25 percent of all new drugs and biologics approved last year were cancer treatments.

Nonetheless, Medco acknowledges that 2006 drug spending grew by only 2.8 percent, largely due to the increased use of generic drugs and changes brought on by Medicare Part D.

Here’s the Medco release.
[tags]Generics, Medco Health Solutions[/tags]