U.S. spending on medicines declined in 2012, IMS reports

Article

Last year, Americans spent less on medicines per capita (3.5%) because of a greater availability of lower costing generics, a decline in the use of brand-name products, lower levels of price increases, and a reduction in spending on new medicines, according to a new report from the IMS Institute for Healthcare Informatics.

Last year, Americans spent less on medicines per capita (3.5%) because of a greater availability of lower costing generics, a decline in the use of brand-name products, lower levels of price increases, and a reduction in spending on new medicines, according to a new report from the IMS Institute for Healthcare Informatics.

In 2012, total drug spending amounted to $325.8 billion, a decline of 1.0% on a nominal basis. Approximately 84% of the drugs dispensed last year were generics, and spending in this group increased by $8 billion. Branded drug expenditures overall reached $230 billion in 2012, and Americans spent $10.8 billion on new branded drugs last year, according to the “Declining Medicine Use and Costs: For Better or Worse?” report.

“For some, this will be good news and a harbinger of more efficient use of our healthcare resources,” wrote Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, in the report. “For others, this decline may indicate undertreatment and imbalance between prevention and care.”

Compared with overall healthcare spending, the trend of slower spending growth of prescriptions is expected to continue over the next 5 years. The use of generics is predicted to reach 87% of all drugs dispensed by 2017. Over the last 10 years, the use of generics has grown from 54% in 2003 to 84% last year, which is due to patent expiries for branded products. Branded generics have also seen a steady decline over the last 10 years, from 11% of prescription volume in 2003 to 7% in 2012.

Fewer office visits

A decline in visits to doctors’ offices, non-emergency hospital admissions, and outpatient treatments impacted overall healthcare utilization and medicine spending, thus contributing to the reduction of overall costs of medicines, the report explained. However, emergency room admissions did increase by almost 6% last year.

More employees with health insurance face higher deductibles and higher copays, and are now responsible for a larger portion of their own healthcare costs. This may be reflected in the overall decline in outpatient healthcare utilization seen last year. On a brighter note, most patients’ prescription drug costs have decreased, and more than 70% have co-pays of $10 or less for their prescriptions. However, depending on the specific insurance coverage, out-of-pocket costs vary substantially, the report emphasized.

“Patient out-of-pocket cost increases have been seen in both preferred provider organizations (PPO) and consumer-driven health plans (CDHPs). Payers have been shifting more of the burden of insurance and prescription drug costs to patients,” the report stated.

“Rising copays or co-insurance are linked to increased abandonment and poorer adherence while conversely, patients who pay less out of pocket are less likely to abandon medication and more likely to stay on therapy,” according to the report.

Major therapeutic areas

Five therapeutic areas drove more than one-third of drug spending in 2012. The most was spent on oncologics ($25.9 billion), followed by mental health drugs ($23.5 billion), respiratory agents ($22.1 billion), antidiabetes agents ($22.0 billion), and pain ($18.2 billion), IMS reported.

New brand launches in the oncologic class contributed $1.4 billion in 2012. Targeted oncologics increased by $2.5 billion, driven by brand launches over the last 2 years. Hormonal therapies for breast and prostate cancer had a reduction in spending following the generic introduction of letrozole in 2011.

Spending on mental health drugs dropped by $6.2 billion in 2012 from the previous year because of the losses of patent protection for olanzapine (Zyprexa), quetiapine (Seroquel), and ziprasidone (Geodon). The spending on these three generics in 2012 reached $984 million. In addition, the selective serotonin reuptake inhibitor, escitalopram (Lexapro) also came off patent. The generic version of this drug accounted for $1.1 billion in spending last year.

Respiratory drug spending growth declined slightly in 2012, compared to the previous year. This could be attributed to the generic introduction of montelukast (Singulair), with a spending decline by $1.2 billion.

Antidiabetes agents were another major therapeutic category that accounted for 174 million prescriptions, costing $22.0 billion in 2012. Human insulins, synthetic analogues, and dipeptidyl peptidase-4 inhibitors accounted for much of the spending increases last year.

Americans spent $18.2 billion to relieve pain in 2012, a slight increase of 1.6% compared to 2011. More than 470 million pain medications were dispensed last year, the IMS report stated.

Related Videos
fake news misinformation | Image Credit: Bits and Splits - stock.adobe.com
Dr. Charles Lee
© 2024 MJH Life Sciences

All rights reserved.