IMS Report: US Spending on Medicines Hit $310 Bln in 2015

Marcia Frellick

April 14, 2016

Spending on drugs grew 8.5% in 2015, down about two percentage points from 2014, but still increasing at the second highest rate since 2001, according to a report released today by the IMS Institute for Healthcare Informatics. That takes total net price spending on all medicines in the United States to $310 billion.

Net prices are distinct from invoice price-based numbers in that they take into account rebates and discounts made by manufacturers.

Drugs that have been available for less than 2 years accounted for more than half of the total spending growth. Big drivers in this group were recently approved treatments for hepatitis C, cancer, multiple sclerosis, and diabetes.

Number Getting HCV Treatments Up 46%

The report notes that the recent breakthrough hepatitis C virus (HCV) treatments, with cure rates above 90%, were used to treat nearly 250,000 patients in 2015, up 46% from 170,000 patients in 2014 and 10 times the 20,000-30,000 per year in 2013 and earlier.

Murray Aitken, executive director of the IMS Institute, said in a conference call with reporters, "We expect to continue to see robust levels of growth in specialty drugs."

Aitken said that the level of net price increases also reflects a growing contribution by manufacturers to patients in making coupons and vouchers available to offset out-of-pocket costs.

Still, the report says that the average patient cost for a brand prescription filled through a commercial plan is up by more than 25% since 2010, and was $44 per prescription in 2015 largely due to more health plans with pharmacy deductibles and higher copayments and coinsurance. The average cost to patients for generics has remained at about $8 since 2010.

Aitken says IMS is seeing a rise in vouchers particularly for patients with diabetes and, within that group, people who pay at least $50 for prescriptions.

Competition is ramping up in that sector with the introduction of new treatments in the past 5 years, he said, and physicians are under pressure to make sure they are being used by the right patients so manufacturers have incentives to make them more affordable.

"Over time we see more of this happening. Once you start, it's difficult to stop," because patients start to rely on the discounted price, Aitken said.

Drug Pipeline is Flowing

Aitken says physicians will find good news in the report from the number of new treatment options.

"About five years ago, people were questioning whether the [research and development] pipeline was dry," he said. "We don't hear that question any longer."

He noted that there were an additional 30 new brands launched last year and 14 new nonorphan drugs that had new mechanisms of action, double the number from 2014 "and significantly higher than we've seen in earlier periods."

He continued, "We think that is a mark of the magnitude of the innovation that is flowing from the pipeline". "We expect 43-49 new active substances will be launched, on average, each year for the next five years."

Aitken pointed to potential in cancer drugs where, "there are almost 600 drugs in phase 2 clinical trials, phase 3 or preregistration." Oncology medicines had the greatest share of launches over the past 10 years, and accounted for 35% of all launches in 2015, according to the report.

Antidepressants, Diabetes Drugs Lead Prescription Growth

Prescriptions were up 1% overall in 2015, lower than the previous 3 years when growth was about 3%.

However, volume trends differed significantly across the medication categories with the largest growth coming in antidepressants and diabetes, each of which increased about 10%.

In contrast, prescriptions dispensed for narcotics fell by 16.6 million, which is consistent with a tightening of access to the drugs, Aitken said. The reduction in narcotics came primarily from fewer prescriptions filled for acetaminophen-hydrocodone. However, prescriptions for oxymorphone increased 5.3%.

More NPs and PAs Prescribing

The report shows that prescription sources and delivery have changed drastically in recent years.

The number of prescriptions ordered by nurse practitioners (NPs) and physician assistants (PAs) has doubled since 2010, from 327 million to 676 million.

"We see that nurse practitioners and physician assistants are being used more widely, particularly in states that face workforce shortages," Aitken said.

Urgent care centers and pharmacy in-store clinics show growth in the report of 115% over the past 5 years. They still make up a relatively small percentage of healthcare facilities but are important signs of the shift in the way healthcare is delivered, Aitken said.

Projections for 2020

The report's authors project growth in cost of medicine by 2020 on a net price basis in the 4%-to-7% range and predict spending will grow to $370 billion-$400 billion by then, with continued increases in coupons and discounts.

One factor to watch in future reports will be biosimilars. In March 2015, the US Food and Drug Administration approved the first agent through the biosimilar pathway (Zarxio/filgrastim, Novartis); the drug was launched in August 2015. As of December 2015, filgrastim biosimilars had contributed savings of over $72 million. By the end of last year seven biosimilar applications were pending.

The study was produced independently by the IMS Institute for Healthcare Informatics as a public service, without industry or government funding. The authors and Murray Aitken reported no relevant financial relationships.

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