What are the recent and forecasted trends in prescription drug spending?


The cost of prescription drugs has become a hot-button issue with consumers and policymakers.  One in four people taking prescription drugs report difficulty affording their medication and recent Kaiser Family Foundation opinion polling has found bipartisan support for government action to lower prescription drug costs. This chart collection explores trends in spending on prescription drugs, and an earlier brief also explored trends in this topic.  

Growth in prescription spending had slowed, but increased rapidly in 2014 and 2015


New specialty drugs are having an upward effect on spending, according to CMS, echoing other analyses by PwC, Express Scripts and IMS Health. In 2015, pharmaceutical spending grew 8% on a per capita basis, but analysis of CMS projections suggests growth in per capita drug spending will decelerate to 4.0% in 2016 and 5.5% in 2025.

Estimates suggest that Rx drugs will continue to represent a larger portion of overall health spending


Prescription drugs had represented a shrinking share of total health spending through 2013, but drug spending has since increased and is expected to continue to grow over the next several years.

Out-of-pocket spending for Rx drugs remained flat in 2015, physician services spending grew


In 2015, per capita out-of-pocket spending on prescription drugs was similar to the previous year, however physician services are estimated to have increased slightly.

Most people taking Rx drugs say they can afford their treatment, but about 1 in 4 have a difficult time affording their medicine


About one in four people taking prescription drugs report difficulty affording their medication, and a recent Kaiser Family Foundation opinion poll found that 51% of voters consider a candidate’s plan to address prescription drug prices important to their vote in the 2016 presidential election.

Out-of-pocket costs for Rx drugs are expected to increase, but will likely represent a smaller portion of overall Rx spending


While per capita out-of-pocket spending on prescription drugs is expected to grow in coming years, it has fallen as a share of total drug spending and this trend is projected to continue into future years. Medicare is expected to represent a growing share of drug spending over the next decade.

Recent drug spending growth has largely been due to new brands, high prices for existing drugs, and fewer patent expiries


A report from QuintilesIMS Institute (formerly IMS Institute for Healthcare Informatics) found that net spending on drugs grew 8.5% from 2014 to 2015. The main drivers of pharmaceutical spending in 2015 were growth in brand-name drug prices, the emergence of new brand medications, and to a lesser extent, price growth for generic drugs. In the years before 2014, patent expiries played a significant role in slowing drug spending growth. The effect of these patent expires peaked in 2012, reducing spending by $32.6 billion, according to QuintilesIMS estimates. Since then, however, the impact of patent expiries has tapered, resulting in only a $12.1 billion reduction in drug spending in 2014, and a $14.2 billion reduction in 2015.

Costly new specialty drugs were a major driver of a recent spike in health spending


Several analyses identify specialty drugs as a primary driver of recent drug spending. Specialty drugs are used for the treatment of complex, chronic, or rare conditions such as cancers and hepatitis C. The Express Scripts 2016 Drug Trend Report indicates that the traditional drug trend (utilization and cost) decreased from 6.4% in 2014 to -1.0% in 2016 after an over 2.5 times increase from 2013 to 2014. The trend for specialty drugs jumped over 2 fold from 2013 to 2014, decreased 42% from 2014 to 2015, and recently decreased another 25% from 2015 to 2016.

Diabetes medicines topped traditional drug spending in 2016, more than doubling spending for the second leading category


The Express Scripts 2016 Drug Trend Report found that in 2016, diabetes medications remained the most expensive of the top ten traditional therapy classes, ranked based on per-member-per-year (PMPY) spending. PMPY spending on diabetes medications was $108.80 in 2015, followed by $51.64 for pain/inflammation drugs, and $38.45 for high blood cholesterol medication. Due to a 76.4% drop in PMPY spending from 2015 to 2016 on compounded drugs (attributed to regulation of unnecessary and high-cost compounded therapies) and to a 32.0% decrease in the unit cost of mental/neurological disorder drugs (largely resulting from the introduction of a generic), compounded drugs and mental/neurological disorders were replaced as top traditional therapy classes by depression and contraceptives.

Medications for inflammatory conditions and multiple sclerosis topped specialty drug spending in 2016


Medications for inflammatory conditions (rheumatoid arthritis, psoriasis) accounted for 39% of spending among the top 5 specialty drug therapy classes reported in the Express Scripts 2016 Drug Trend Report. Medications for hepatitis C were new to the top 10 list in 2014 when spending for just three new hepatitis C medications accounted for 96.4% of total spending for this class of treatment. With the introduction competing therapies and the initial wave of hepatitis C patients completing curative treatment with these medications, spending growth on hepatitis C medications slowed to 7 percent in 2015 and -34% in 2016.

Growth in price and utilization of pharmaceuticals has varied over the past 2 decades


For much of the past two decades – with the exception of the period surrounding the economic downturn – growth in utilization outpaced growth in pharmaceutical prices. The price index for drugs has held relatively stable since the mid-1990s (ranging in growth from about 1% to 5% annually), while the utilization index has changed more over time. Due to the way drugs are selected for inclusion in the price index, it can take some time for new drugs to be incorporated into the index.

Generic drug prices have declined while branded drug prices have nearly doubled in price


While generic drug prices have decreased over time, there have been some increases during the 2008-2016 time period. According to data from Express Scripts, instances of generic drug price inflation have been due to manufacturer consolidation (fewer manufacturers producing the generic) and/or temporary shortages of active ingredients needed to produce the generic drug.

The average price of Celebrex in the U.S. is about 63% higher than in Switzerland


A report by the International Federation of Health Plans (IFHP) found that drug prices in the U.S. are higher on average than prices in similarly wealthy and sizable countries. The following slides provide some examples of specific drugs included in the IFHP report. In 2013, the United States had the highest average price for Celebrex (prescribed for pain). Data from IFHP indicate that the average price of Celebrex in the U.S. was about 63% higher than in Switzerland (the country with the 2nd highest average price) and about 341% higher than in Canada (the country with the lowest average price).

The average price of Nexium in the U.S. is almost 3 times more than the average price in Switzerland


Nexium is prescribed to treat acid reflux. According to the International Federation of Health Plans, the average price of Nexium in the U.S. in 2013 was almost three times more than the average price in Switzerland, which had the second highest price after the U.S.

The average price of Humira is about 15% higher in the U.S. than in Canada


Humira, prescribed to treat rheumatoid arthritis, is ranked number 1 in per-member-per-year (PMPY) spending of the top 10 specialty therapy drugs in the Express Scripts 2014 Drug Trend Report. The report indicates that Humira accounted for 11.9% of total specialty drug spending in the U.S in 2014 and had a 10.7% increase in utlization. According to 2013 data from the International Federation of Health Plans, the average price of Humira in the U.S. is about 15% higher than the average price in Canada (the country with the 2nd highest average price) and about 155% higher than the average price in Switzerland (the country with the lowest average price).

The average price of Enbrel in the U.S. is about 35% higher than in Canada


Enbrel, prescribed to treat certain autoimmune diseases, is ranked number 2 in per-member-per-year (PMPY) spending of the top 10 specialty therapy drugs in the Express Scripts 2014 Drug Trend Report. The report also indicates that it accounted for 8.2% of total specialty drug spending in the U.S. in 2014 and had a 2.2% decrease in utilization. According to data from the International Federation of Health Plans, the average price of Enbrel in the United States is about 35% higher than the average price in Canada (the country with the highest average price after the U.S.) and about 119% higher than the average price in Switzerland (the country with the lowest average price).

The average price of Copaxone in the U.S. is almost 3 times the average price in Switzerland


Copaxone, prescribed to treat multiple sclerosis, is ranked number 4 in per-member-per-year (PMPY) spending of the top 10 specialty therapy drugs in the Express Scripts 2014 Drug Trend Report. According to the report, Copaxone accounted for 5.0% of total specialty drug spending in the U.S. and dropped 7.3% in utilization in 2014. Data from the International Federation of Health Plans show that in 2013, the average price of Copaxone in the United States was about 188% higher than the average price in Switzerland and 353% higher than the average price in England.

The average price of Gleevec in the U.S. is 71% more than the average price in Switzerland


Gleevec (prescribed to treat some cancers) is ranked number 8 in per-member-per-year (PMPY) spending of the top 10 specialty therapy drugs in the Express Scripts 2014 Drug Trend Report. The report indicates that it accounted for 2.2% of total specialty drug spending in the U.S. in 2014, and its utilization dropped 5.3%. Data from the International Federation of Health Plans show that in 2013, the average price of Gleevec in the U.S. was more than 445% higher than the average price in Canada (the country with the lowest average price) and 71% higher than the average price in Switzerland (the country with the highest average price after the U.S.).

The average price of Cymbalta in the U.S. is 76% more than the average price in Canada


In 2013, the U.S. had the highest average price for Cymbalta (prescribed to treat depression, anxiety, and fibromyalgia). The average price of Cymbalta in the U.S. was almost double the average price in Canada and 4 times the average price in England.

The average price of Gilenya in the U.S. is more than double the average price in Canada


Gilenya is prescribed to treat multiple sclerosis. Data from the International Federation of Health Plans show that in 2013, the average price of Gilenya in the United States was more than double the average price in Canada.

Drugs count for a bigger share of health spending than many think


In 2014, prescription drugs accounted for 10% of U.S. health spending but 21% of employer insurance benefits. 

Medicare has become a major payer for prescription drugs


With the launch of Medicare Part D and the ACA’s closing of the “Donut Hole” (a prescription drug coverage gap resulting in Medicare enrollees paying out-of-pocket in addition to their deductible and copayments or coinsurance), Medicare has become a major payer for prescription drugs. From 2005 to 2015, Medicare’s contribution to total national health spending on prescription drugs jumped from just 2% to 29%, making it the second largest contributor to drug spending after private insurance.

Most Americans favor action to keep drug prices down


When asked about policy options for keeping prescription drugs cost down, 86% of Americans favored requiring drug companies to report on how drug prices are set. Eight-two percent favored allowing Medicare to negotiate with drug companies for lower drug prices, 78% favored limiting prices for high-cost drugs (e.g., for cancers and Hepatitis C), and 71% favored allowing the purchase of drugs imported from Canada.