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Report: Rise in Drug Costs to Hospitals, Clinics Slowing in 2013

Researchers find rise less than in previous years; cancer drugs the exception (Feb. 15)

Even though costs for medications will continue to rise in 2013 by as much as 4%, the increase is projected to be less than in previous years, according to a report published online in the American Journal of Health-System Pharmacy.

The report, titled “Projecting Future Drug Expenditures in U.S. Non-Federal Hospitals and Clinics—2013,” looked at drug-expenditure trends in 2011 and 2012, projected drug expenditures for 2013, and examined factors likely to influence drug expenditures.

Based on a variety of data, including new drug approvals and patent expirations, the authors project a 1% to 3% increase in drug expenditures across all settings; a 2% to 4% increase in expenditures for clinic-administered drugs; and a 1.5% increase in hospital drug expenditures for 2013.

“In the aggregate, drug expenditure growth is moderating, especially in the hospital setting,” said principal author James M. Hoffman, PharmD. “But when we focus on specific drugs, such as drugs frequently used in clinics, we also see dramatic increases in expenditures. Cancer therapies in particular stand out as costly drugs for hospitals and clinics, and the paper summarizes the high costs for new oncology agents that came on the market in 2012 and the top 20 antineoplastic drug expenditures in clinics in 2011 and 2012.”

The overall increase in drug costs is less than in previous years, according to the authors. The increasing availability of less-expensive generic products is a primary factor in the reduction of drug expenditures.

From September 2011 to September 2012, prescription sales in the U.S. totaled $326 billion — a 0.8% increase from the previous 12 months. The growth rate was the lowest in recent history. The authors attribute this slowing to modest increases in expenditures for new products (3.3%) and pricing of existing products (5.9%), coupled with a marked decline in overall volume and mix (less than 8.4%).

Retail pharmacies, mail-order pharmacies, and clinics accounted for most of the prescription expenditures. Oncology medications and biologics continue to be large and important expenditures for hospitals and clinics. Antineoplastic drugs were the top medication expenditures in nonfederal hospitals in 2012, accounting for 15.1% of all hospital drug expenditures in 2012, whereas oncology products accounted for 32.2% of drug expenditures in clinics during the first 9 months of 2012.

Hoffman noted the significant number of expensive cancer therapies that have been approved in recent years. “We have reached a new threshold where a course of treatment for some new cancer therapies can cost more than $100,000, which illustrates the growing challenge oncology drug costs present to hospitals and clinics,” he said.

Hoffman added that several other developments will influence prescription drug expenditures in coming years, including the FDA’s implementation of an approval process for biosimilars and other actions that facilitate the introduction of generic drugs into the medication pipeline. Although unresolved issues remain, the introduction of biosimilars will present a new cost savings opportunity for the health system, but biosimilars are not expected to influence drug costs in 2013.

Data for the analysis were obtained from the IMS Health National Sales Perspectives (NSP) database. The NSP sample is derived from more than 1.5 billion annual transactions from more than 100 pharmaceutical manufacturers and more than 700 distribution centers.

Source: St. Jude Children’s Research Hospital; February 15, 2013.

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