Cubic News

Under the microscope: are plans overpaying for newer therapies for Diabetes?

July 2011

The therapeutic mix of diabetic medications has changed drastically in the last five years, resulting in the wider use of newer and more expensive brand insulins, such as Lantus® and Levemir®, and oral products like Avandia® and Januvia®.  The bottom line is that these newer classes of brand medications, which continue to become available to treat diabetes, are substantially more expensive than older, traditional drug therapies: 

• Whereas newer, long-acting, insulin products like Lantus® and Levemir® offer better convenience for patients (e.g. once daily versus twice daily administration, less risk for low blood sugar, etc.), they come at a price:   looking at a head-to-head comparison of their ingredient costs, traditional intermediate-acting insulin costs about $100 for a three-month supply whereas a similar daily dose of Lantus® or Levemir® costs closer to $200 for the same duration.*
• For the oral products, a three-month supply of generic glyburide costs about $7, whereas the same 90-day supply of Januvia® costs almost 40 times as much at $270.*

 * Price comparisons do not include dispensing fees/mark-ups on ingredient costs.

Considered another way, for the same price of treating one plan member with a drug from a newer class of diabetes medications, 8 to 12 plan members could be treated with a drug from a traditional class of diabetes medications such as a glyburide, gliclazide or metformin.[1]

With plan spending for diabetes comprising nearly 7% of overall drug costs for Canadian plan sponsors in 2010, plan sponsors ought to be asking if there is value in paying premium prices for these newer brand drugs when traditional diabetes therapies have long been genericized.[2]  As diabetes is a progressive condition that gets worse over time, most patients eventually require two or more drugs to treat their condition.  Given this, and the increasing prevalence of diabetes worldwide, Canadian plan sponsors may risk future growth in plan costs in this area. 

In a recently published report on the cost-effectiveness of diabetes medications, if metformin – the current first-drug of choice for Type 2 diabetes – is no longer sufficient to control blood sugars, the Canadian Agency for Drugs and Technologies in Health (CADTH) recommends patients should be started on a sulfonylurea (e.g. glyburide), and then if needed, on a traditional, immediate-acting insulin.  The added costs for a patient started on generic glyburide would be about $0.07 per day, and adding the traditional insulin would cost just over $1 per day.  On the other hand, the plan would incur an average cost of more than $3 per day for the addition of newer oral brand therapies like and Avandia® and Januvia®.

Should plan optimization and cost containment be priorities, the strategic placement and preferential coverage of traditional and generic products in an alternative plan design could be considered to provide financial incentive for plan members to use traditional, lower-cost diabetic medications, thus offering plan sponsors the greatest “bang for their buck” in this therapeutic area.

References:

[1] CADTH Summary Report:  Second- and Third-Line Therapy for Patients with Type 2 Diabetes.  Ottawa:  Canadian Agency for Drugs and Technologies in Health (CADTH).  Accessed July 7, 2011.  Available:  http://www.cadth.ca/media/pdf/sec-third-line_type-2-diab_summ_e.pdf

[2] Cubic Health National Benchmark, 2010.

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