Pharmaceutical spending up slightly in 2013

While pharmaceutical spending growth remains historically low in the United States, a recent IMS Health study finds there was a 3.2% increase in spending on medicines in 2013, a bounce back from the 1.0% decline the previous year. On a per capita basis and adjusting for inflation, the report found a 1% increase in pharmaceutical spending in 2013.

The study attributes most of the increase in spending on drugs to the reduced impact of expiring patents. Drugs coming off patent in 2012 reduced spending by $29 billion, but only reduced 2013 spending by $19 billion.

“The largest single driver of the increase in spending growth from -1.0% in 2012 to 3.2% in 2013 was the lower impact of patent expiries – $10 billion less than in 2012 – accounting for 3.5% of the 4.2% shift in growth.”

IMS Health, Medicine Use and Shifting Costs of Healthcare

Growth in drug spending is also rebounding as utilization of healthcare services overall increased for the first time in 3 years, according to IMS. The study also finds that the out-of-pocket costs associated with some prescription drugs have dropped.

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“Prescription drug costs paid by most patients are declining, with average out-of-pocket costs falling below $5 for 57 percent of all retail prescriptions filled. At the same time, 30 percent of total patient out-of-pocket costs relate to just 2.3 percent of prescriptions, often high-cost specialty medicines. Twenty-three percent of prescriptions now carry no out-of-pocket costs, a dramatic rise in 2013 driven by common preventive medicines that include oral contraceptives.”

IMS Health, Medicine Use and Shifting Costs of Healthcare

Another driver of the recent growth in pharmaceutical spending is the introduction of several new medications, including dozens of New Molecular Entities (NME) used to treat serious illnesses like cancer, HIV, and a record-breaking number of new orphan drugs that treat rare diseases. According to IMS, some of these new drugs also have the potential to reduce costs for other services (for example by reducing doctor visits and hospital stays).

The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

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