Obesity Treatment Rates Increase as GLP-1 Inhibitors Prosper
The U.S. health system exhibited strong growth in medicine use and spending. The complex nature of how medicines are paid for and the changing policy environment raises essential questions about medicine spending and patient out-of-pocket costs in the coming years. In retail drug usage, dispensed prescriptions reached 6.7 billion in 2022, with growth at 3.6% exceeding pre-pandemic levels. Within this growth are notable areas of utilization, including ADHD medicines, antibacterials, and newer diabetes therapies that are also used to treat obesity.
Spending on medicines reached $429 billion in 2022, growing 5.3%. This increase includes the continued contribution of COVID-19 vaccines. Specialty medicines now account for 51% of spending, up from 32% in 2012, driven by growth in immunology and oncology. Oncology, neurology, and obesity will drive the most growth in spending during the forecast period. The development of obesity medicines has historically been challenging and there have been many failures, even after regulatory approval. In most of these drugs the failures were due to cardiovascular side effects, increased suicidal risk, or increased risk of drug dependence and abuse. The newer GLP-1 (glucagon like peptide 1) agonist drugs (a drug that activates certain receptors in the brain) are not only safer but also cardio protective in nature which is very relevant considering the cardiovascular risk factors which are generally present in obesity patients. The early uptake in sales highlights the demand for such drugs.
The Evolution of DIR Fees: Changing the Process
Over the years, direct and indirect remuneration (DIR) fees have evolved significantly. Originally intended to incentivize pharmacies to provide high-quality care, they have instead become a source of revenue for pharmacy benefit managers (PBM). Between 2010 and 2020, Centers for Medicare & Medicaid Services (CMS) reported that retroactive DIR fees increased by an astonishing 107,400%. In a survey conducted by the National Community Pharmacists Association (NCPA), 84% of independent pharmacies reported that DIR fees have a moderate to severe impact on their business.
In the first half of 2024, pharmacies will have the retroactive DIRs from 2023 and the new DIRs will occur at the point of sale. This means pharmacies will be paying double the amount of DIR fees that they normally would for the first part of 2024 until all of the retroactive fees have been paid. In the face of declining prescription drug reimbursements and changes in the marketplace, many regional pharmacy chains are diversifying their pharmacy offerings, as evidenced by the innovative strategies they have pursued to promote growth, enabling their pharmacists to practice at the top of their licenses. Offering a wide array of services including prescription dispensing; vaccinations; COVID-19 testing, counseling and therapeutics; vital monitoring; diabetic/fasting blood glucose readings; and much more will continue to drive growth while making up revenue for DIR fee changes.
The retail pharmacy landscape is evolving. This is the pharmacy of tomorrow.
