Prescription Drug Spending Slowing

Just as other recent data has shown, United States prescription drug spending went up in 2016 at a slower rate than in previous years, according to QuintilesIMS Institute research released on May 4.

While drug spending grew at a 4.8% pace in 2016 to $323 billion, that is less than half the growth rate of the previous two years, after adjusting for off-invoice discounts and rebates. This spending trend is linked to increased competition among pharmaceutical manufacturers as well as payers that ramped up efforts to limit price increases, QuintilesIMS said in a statement.

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While total prescriptions dispensed reached 6.1 billion-up 3.3% over 2015 levels-the spike in new patients being treated for hepatitis C has eased a bit, which contributed to the spending decline.

“After a year of heated discussion about the cost and affordability of drugs, the reality is that, after adjusting for population and economic growth, total spending on all medicines increased just 1.1% annually over the past decade,” said Murray Aitken, senior vice president and executive director of the QuintilesIMS Institute. “Understanding how the dynamics of today’s health-care landscape impact key stakeholders is more important than ever, as efforts to pass far-reaching health-care legislative reforms remain on the political agenda.”

The increase in total spending in 2016 of $27.3 billion on an invoice-price basis and $14.8 billion on a net basis, was driven by new brands and protected brands, according to the report. The average net price for brands already in the market is estimated to have increased by 3.5% in 2016, up from 2.5% in 2015, while remaining significantly lower than prior years.

“This reflects the heightened competition among manufacturers and more aggressive efforts by health plans and pharmacy benefit managers to limit price growth,” the report stated.

New medicines introduced in the past two years continue to drive at least half of total spending growth as innovative treatments for cancer, autoimmune diseases, HIV, multiple sclerosis, and diabetes launched.

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However, out-of-pocket costs for patients continued to decline in 2016, reaching $8.47 on average, compared to $9.66 in 2013. “Nearly 30% of prescriptions filled in 2016 required no patient payment, due in part to preventive treatment provisions under the Affordable Care Act, up from 24% in 2013,” the Quintiles IMS statement said. “The use of copay assistance coupons by patients covered by commercial plans also contributed to the decline in average out-of-pocket costs, and were used to fill 19% of all brand prescriptions last year-compared with 13% in 2013.”

Those patients who were filling brand prescriptions while in the deductible phase of their commercial health plan accounted for 14% of prescriptions and 39% of total out-of-pocket costs. Patients in the deductible phases of their health plan abandoned about one in four of their brand prescriptions, according to the report.

Quintiles IMS projected that U.S. net total spending will increase 2% to 5% on average through 2021, reaching between $375 and $405 billion.