The rising cost of diabetes care

The sky is the limit when it comes to diabetes care spending

When it comes to spending on diabetes care, the sky is seemingly the limit.

Over time the cost of diabetes-related care has risen sharply and now constitutes one of the primary drivers of health care spending in the United States. Spending on diabetes and pre-diabetes is currently $322 billion per year, up from $245 billion in 2012 and now accounts for one-fifth of overall healthcare spending in the U.S.1 From 2015 to 2016, U.S. spending on diabetes related medications increased from $43.9 billion to $51.5 billion.2

This chart demonstrates that diabetes is consistently at the top of employer drug spending:

Top Therapeutic Classes by Invoice Spending

 

 

This increase in spending is partially due to an increase in the percentage of people with diabetes. While 4.7% of men and 4.3% of women in the U.S. had a form of diabetes in 1980, by 2014 8.2% of men and 6.4% of women had the disease.

We will discuss the demographic and societal factors driving this rise in the number of diabetics in the next section of this report. Presently, we will examine why diabetes is becoming increasingly costly to treat on a per patient basis.

This is a very important question for providers of employer-sponsored insurance, who alongside government programs such as Medicaid and Medicare, are bearing the brunt of spending on diabetes-related care.

For plan sponsors, the costs related to treating an employee with diabetes are nearly double what they are for an employee without diabetes.3 The most recent estimate of per capita spending on people with diabetes is $16,021 per year, over $10,000 higher than per capita spending for people without diabetes.4

Total Per-capita Spending for Employees with and without diabetes: 2010-2014

 

The Cost of Chronic Care

Much of the cost of diabetes treatment is tied to the nature of the disease itself. Diabetes is a chronic disease: by definition, it progresses and persists. As a result, so do the costs of providing its ever-widening array of treatments.

Since it is estimated that type 2 diabetes accounts for 90-95% of all diabetes diagnoses,5 we will focus our analysis there. While improvements to diet and exercise can forestall development of type 2 diabetes, at the present time it cannot be prevented by vaccines or cured by medication.6 In short, a patient diagnosed with diabetes is in it for the long haul.

In addition to the unremitting nature of the disease itself, diabetes costs patients and plan sponsors in other ways. People with diabetes tend to use more of all prescription drugs than those without diabetes, not just for drugs used to treat diabetes. For example, people with diabetes use cardiovascular drugs at seven times the rate of non-diabetics.7 Similarly, people with diabetes visit doctor offices and emergency rooms much more frequently than people without diabetes.8

The assemblage of co-morbidities associated with diabetes is vast and varied. In addition to obvious ailments such as obesity, cardiovascular disease, hypertension, and kidney disease,9 diabetes is also associated with higher incidences of:

  • obstructive sleep apnea10
  • cancer11
  • eye disease12
  • and even bone fractures13

The role of diabetes in amputations is well known, with diabetics receiving lower-limb amputations at a rate eight times higher than the nondiabetic general population.14 More unexpectedly, young adults with diabetes are admitted to hospitals for mental health and substance use issues at four times the rate of their non-diabetic peers.15

Drug Cost

Any discussion of the cost of treating diabetes needs to include the cost of the drugs used to treat it. Currently, the cost of diabetes medicines is plagued by the twin problems of increased utilization and rising unit cost.16 Indeed, total spending on diabetes medications outstrips all others, even cancer drugs.

It wasn’t always this way. For decades, the drugs used to treat diabetes mostly fell into one of three classes, insulins to treat type 1 diabetes and sulfonylureas and biguanides to treat type 2 diabetes.17 In the past twenty years, the number of antidiabetic drug classes has risen to 12 and now encompasses a wide range of oral and injectable medications.18

Importantly, many of these drug classes are used in combination with each other to treat diabetes. Among diabetics receiving conventional treatment, the same percentage take insulin and an oral antidiabetic medication together as those who take insulin only19 (see chart). For example, a class of drugs known as GLP-1 agonists, which includes popular brand names such as Victoza® and Trulicity®, is often used in combination with oral drugs.20

While pairing different drugs can lead to higher efficacy than with either agent alone, the cost implications of increased utilization of multiple antidiabetic medications by a single person are clear. Even as the prices of older, oral diabetes medications fall, it is more than offset by the cost of newer, more expensive drugs for diabetes care entering the market in the past few years.

A recent trend analysis performed by OptumRx provides more granular confirmation of rising diabetes drug cost. Not surprisingly, among traditional medications, the top three classes driving spending on a per-member basis were medications used to manage diabetes.16

This graph shows how diabetes drug spending has risen far faster than all other drug classes:

U.S. invoice spending for top therapeutic classes: 2014-2016

 

 

The Big Three

Non-insulin injectable diabetic medications were the drug class with largest spending increase on a per member/per month basis. This class, which includes the popular medication Trulicity, saw costs rise 35.9% or $0.048 PMPM. The primary reason for the rise in spending was increased utilization, with the number of prescriptions for Trulicity rising 22.3% from the previous year. 16

The second drug class driving diabetes spending are sodium-glucose transport protein 2 (SGLT2) inhibitors, a group of medications including popular brand names Invokana® and Jardiance®. SGLT2 inhibitors work by blocking the reabsorption of glucose by the kidneys. As a class, the price of SGLT2 inhibitors rose 32.3% from the previous year, which in turn drove employer spending from $1.07 PMPM to $1.42 PMPM. Again, increased utilization was key, with prescription counts rising 22.4% from the same time period in 2016.16

Perhaps nothing epitomizes the increasing cost of treating diabetes than insulin. Despite being on the market for decades, the price of insulin has risen markedly in recent years. Insulin prices rose 7.3% just in the past year, driven by use of newer formulations of insulin such as Tresiba® and Toujeo®.16

Unlike non-insulin injectable drugs and SGLT2 inhibitors, the rise in spending on insulin is more about rising unit cost than increased utilization. To put this in a volumetric perspective, the average price of insulin has nearly tripled, from $4.34 per milliliter in 2002 to $12.92 in 2013.21 We’ll discuss the unique circumstances keeping the price of insulin high in the next section of this report.

This concludes our review of current spending patterns for diabetes. Next, we will turn to examining the underlying reasons why costs continue to climb. Please look for our article titled, “Diabetes cost drivers.”

 

STATEMENT REGARDING FINANCIAL INFLUENCE:
This article is directed solely to its intended audience about important developments affecting the pharmacy benefits business. It is not intended to promote the use of any drug mentioned in the article and neither the author nor OptumRx has accepted any form of compensation for the preparation or distribution of this article.

References

  1. American Diabetes Association.  “The Cost of Diabetes.” Accessed at: http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html
  2. Quintiles IMS Institute. “Medecine Use and Spending in the U.S.” Accessed at: https://www.documentcloud.org/documents/3882918-QII-Use-of-Meds-US-05022017-SCREEN-5-11-2017.html
  3. Health Care Cost Institute Inc. “2014 Diabetes Health Care Cost and Utilization Report” Accessed at: http://www.healthcostinstitute.org/report/2014-diabetes-health-care-cost-utilization-reportl
  4. Health Care Cost Institute Inc. “2014 Diabetes Health Care Cost and Utilization Report” Accessed at: http://www.healthcostinstitute.org/report/2014-diabetes-health-care-cost-utilization-reportl
  5. Centers for Disease Control and Prevention. “Diabetes at a Glance 2016.” Accessed at: https://www.cdc.gov/chronicdisease/resources/publications/aag/pdf/2016/diabetes-aag.pdf.
  6. Diabetes care. “Exercise and Type 2 Diabetes” Accessed at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2992225/.
  7. Health Care Cost Institute Inc. “2014 Diabetes Health Care Cost and Utilization Report” Accessed at: http://www.healthcostinstitute.org/report/2014-diabetes-health-care-cost-utilization-report/
  8. Diabetes in America. “Health Care Utilization and Costs of Diabetes” Accessed at: https://www.niddk.nih.gov/about-niddk/strategic-plans- reports/Documents/Diabetes%20in%20America%203rd%20Edition/DIA_Ch40.pdf
  9. The American Journal of Managed Care. “Multiple Chronic Conditions in Type 2 Diabetes Mellitus: Prevalence and Consequences” Accessed at: http://www.ajmc.com/journals/issue/2015/2015-vol21-n1/multiple-chronic-conditions-in-type-2-diabetes-mellitus-prevalence-and-consequences.
  10. Diabetes Self-Management. “Sleep Apnea and Type2 Diabetes” Accessed at: https://www.diabetesselfmanagement.com/about-diabetes/general-diabetes-information/sleep-apnea-and-type-2-diabetes/.
  11. Diabetes Care. “Diabetes and Cancer” Accessed at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2890380/.
  12. National Eye Institute. “Facts About Diabetic Eye Disease” Accessed at: https://nei.nih.gov/health/diabetic/retinopathy.
  13. Current Osteoporosis Reports. “Diabetes and Its Effect on Bone and Fracture Healing” Accessed at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4692363/ on 05.05.2017.
  14. Diabetes Care. “Incidence of Lower-Limb Amputation in the Diabetic and Nondiabetic General Population” Accessed at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2628693/ on 09.05.2017.
  15. Health Care Cost Institute Inc. “2014 Diabetes Health Care Cost and Utilization Report” Acessed at: http://www.healthcostinstitute.org/report/2014-diabetes-health-care-cost-utilization-report/.
  16. Internal Optum data.
  17. Diabetes Spectrum. “A brief History of Diabetes Medications.” Accessed at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4522877/#.
  18. Medscape. “Type 2 Diabetes Mellitus Medication.” Accessed at: http://emedicine.medscape.com/article/117853-medication.
  19. Centers for Disease Control and Prevention. “Estimates of Diabetes and Its Burden in the United States.” Accessed at: https://www.cdc.gov/diabetes/pubs/statsreport14/national-diabetes-report-web.pdf.
  20. Diabetes Care. “Combining Incretin-based Therapies with Insulin.” Accessed at: http://care.diabetesjournals.org/content/36/Supplement_2/S226.
  21. Journal of the American Medical Association. “Expenditures and Prices of Antihyperglycemic Medications in the United States: 2002-2013.” Accessed at: http://jamanetwork.com/journals/jama/fullarticle/2510902.