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U.S. Prescription Drug Spending Rose 13% in 2014
U.S. spending on prescription medications jumped 13% to $374 billion in 2014, the biggest percentage increase since 2001, as demand surged for expensive new breakthrough hepatitis C treatments, according to a new report from the IMS Institute for Healthcare Informatics.
Demand for newer cancer and multiple sclerosis treatments; price increases on branded medications, particularly insulin products for diabetes; and the entry of few new generic versions of big-selling drugs also contributed to the double-digit spending rise in 2014, the report finds.
IMS, a health care information and technology company, does not foresee a similar U.S. spending jump for prescription drugs in 2015.
Specialty medicines now account for one-third of spending, driven by a wave of recent innovations in treatment for autoimmune diseases, hepatitis C, and cancer, the new report finds.
Specialty medicine spending increased by 26.5% to $124.1 billion in 2014; the increase was 16%, excluding hepatitis C treatments. Increasing numbers of launches and growth in spending on specialty products in 2014 were driven by a growing R&D focus on specialty medicines during the past decade.
New hepatitis C treatments from Gilead Sciences that virtually guarantee a cure for the liver-destroying virus, with few side effects, led more than 161,000 patients to start treatment in 2014, IMS says. That compares with only 17,000 in 2013, when thousands put off treatment while waiting for the new drugs to become available.
Gilead reported a record-breaking $10.3 billion in first-year sales of Sovaldi (sofosbuvir) as the $1,000-a-pill drug became the poster child for intense criticism of the high cost of new medications. Spending on new hepatitis C treatments totaled $12.3 billion in 2014.
The IMS report also notes the large number of orphan drugs that made it to the market in 2014, with the introduction of 18 expensive medications for rare diseases.
Meanwhile, the entry of new generic versions of branded drugs reduced spending by about $12 billion in 2014, compared with a reduction of about $20 billion the year before and $29 billion in savings in 2012, when cheap generic versions of Pfizer’s top-selling cholesterol drug Lipitor (atorvastatin) began to flood the market. The lesser savings from generic drugs in 2014 was due in part to FDA sanctions against India’s Ranbaxy that delayed cheap versions of the blockbuster heartburn drug Nexium (esomeprazole, AstraZeneca).
IMS, which compiles U.S. prescription drug data for the industry, also tracked the effect of the Patient Protection and Affordable Care Act (PPACA) on medicine usage, noting that Medicaid was the leading driver of retail prescription growth during the first year of expanded coverage under the PPACA. Overall Medicaid prescriptions increased 17% in 2014, accounting for 70% of the growth in retail prescription demand, IMS notes. These prescriptions increased 25% in states that expanded Medicaid coverage under the Act, compared with a 2.8% increase in states that did not expand Medicaid coverage.
Sources: IMS Institute for Healthcare Informatics; April 14, 2015; and Reuters; April 14, 2015.