Americans’ Rx Drug Spending Tops $300 Billion

Americans’ Rx Drug Spending Tops $300 Billion

Slightly smaller increase than in 2014

 

 

 

 

 

 

 

 

By Joyce Friedan 

Dallas, TX | Posted April 14, 2016

 

U.S. consumers spent 8.5% more on prescription drugs in 2015, than they did a year earlier — shelling out $310 billion, according to a report from the IMS Institute for Healthcare Informatics.

That figure, which refers to the “net price” that manufacturers receive for drugs — including any rebates or other concessions manufacturers make — is about 2% lower than the rate of increase seen in 2014, Murray Aitken, MBA, executive director of the institute, in Parsippany, N.J., told reporters on a conference call. Both years represented relatively high levels of growth compared with 2001, he added.

The spending increase was about $24 billion in absolute terms, “slightly lower than we saw in 2014 but still well above historic levels of growth seen in earlier years,” said Aitken. Specialty drugs were one area that particularly grew, reaching $121 billion on a net price basis.
Specialty drugs “is certainly an area where we are seeing innovation and growth in spending, particularly in hepatitis, oncology, and autoimmune diseases,” and robust growth is expected to continue, he said.

Aitken called it a “light” year for brands having to face generic competition, “although savings [from generics] were greater than in 2014,” he noted. “We also saw moderation in net price increases on branded drugs. Competition has intensified in many therapeutic areas, including diabetes, and with the negotiating power of pharmacy benefit managers, the pressure on pricing has been raised.”

In addition, manufacturers have distributed more coupons and found other ways to decrease patients’ out-of-pocket costs, so that also has affected the net price increase, he said.

Overall, a total of 43 new active substances were launched into the market in 2015, with another 30 new brands launched that used an existing active substance but changed the dosing or treatment administration, the report found. “We saw significant launches in precision medicine, rare diseases, and chronic diseases, benefiting large populations,” said Aitken.

The total number of prescriptions dispensed last year reached 4.4 billion, which was up about 1% year-over-year — a little lower than the 2% growth seen in the last few years, according to Aitken. “We saw higher growth in therapeutic areas such as antidepressants and diabetes,” which were each up about 10%, while the number of narcotic prescriptions fell by about 16%. There was also a decline in the number of prescriptions paid for in cash, he noted.

The average amount that patients paid for each prescription rose $4 in 2015, up more than 25% since 2010. However, “that’s measuring exposure before the offsets that are available through brand-name manufacturers who have increased the use of coupons and [other discounts],” said Aitken. “We have seen that become a more common part of the landscape, particularly in the diabetes market … We looked at patients facing $50 or more per prescription and found that about half of them were able to reduce their out-of-pocket costs to as little as $0 through the application of coupons.”

In the meantime, the average cost of a generic prescription has remained steady for the last 5 years, at about $8, he said.

Although there has been a lot of news coverage lately about high prescription drug prices, they have not really affected the market all that much, Aitken told MedPage Today.

“While there are instances where prices were raised very significantly, their impact on the total market is very, very small because it’s limited to a very small number of companies and a small number of products,” he said. “And while the companies raise their list price, they are not able to receive that because there are intermediaries who negotiate lower prices … Those numbers are not disclosed — they are the result of contractual agreements, but we are confident that we’re in the right place in terms of those estimates.”

He cited the example of treatments for hepatitis C. “They caught a lot of attention when they were first launched, especially when there was only one drug on the market and where the manufacturer priced that relative to [other] options that did exist at the time, but which carried lower efficacy and more acute side effects. But since that introduction, other companies have entered the market” and prices have come down, he said.

Also, in a $300 billion drug market, “the amount spent on hepatitis C is significant, but it’s $18-$19 billion out of a $300 billion market, so it doesn’t necessarily move the needle all that much, especially in subsequent years when prices are stabilizing or even declining.”

Overall, drug spending is predicted to grow by 4%-7% per year on a net price basis through 2020, from $310 billion to $370-to-$400 billion, according to the report.

People should also look for lots of new drugs to launch, Aitken said, “particularly in oncology — there are almost 600 drugs in phase II or phase III [of development]; not all will make it to market, but a significant number will.”

More broadly, there are 6,320 novel products in the late-stage pipeline, and Aitken said he expects 43-49 products to be launched on average each year over the next 5 years.

“So innovation continues, and we believe price concessions will also continue.”

Source: http://www.medpagetoday.com/PublicHealthPolicy/HealthPolicy/57343