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U.S. drug spending, health care use rise in 2013
April 15th, 2014
PARSIPPANY, N.J. – Total U.S. drug spending edged up 1% on a real per capita basis in 2013, and the use of health care services overall rose for the first time in three years, according to a new report by the IMS Institute for Healthcare Informatics.
IMS said Tuesday that its study, "Medicine Use and Shifting Costs of Health Care: A Review of the Use of Medicines in the United States in 2013," found that total dollars spent on medications in the United States reached $329.2 billion last year, up 3.2% on a nominal basis and a rebound from the 1% decrease in 2012.
Primary drivers include the reduced impact of patent expirations, price increases, higher spending on innovative new medicines, and patients' greater use by of the health care system. Patent expiries in 2013 contributed $19 billion to lower medicine spending, compared with $29 billion the previous year.
"Following several years of decline, 2013 was striking for the increased use by patients of all parts of the U.S. health care system — even in advance of full implementation of the Affordable Care Act," Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, said in a statement. "Growth in medicine spending remains at historically low levels despite a significant uptick last year and continues to contribute to the bending of the health care cost curve."
Though drug spending levels have contributed to slower growth in health care outlays since 2007, nominal spending rose sharply last year, IMS noted. The largest single driver of the 4.2 percentage point shift in spending growth in 2013 was the $10 billion lower impact of patent expiries.
Price hikes for branded drugs added $4 billion more in spending growth last year compared with 2012, yet net price growth was essentially flat year over year, reflecting off-invoice discounts and rebates, according to the study. Overall spending on medicines remained concentrated in traditional small-molecule pills dispensed through retail pharmacies, even as higher growth was seen in biologics and specialty drugs, especially in retail and mail-order settings.
The number of doctor's office visits, hospitalizations and prescriptions filled all rose in 2013, the study revealed. The number of patient office visits to primary care physicians fell by 0.7% in 2013, while visits to specialists increased by 4.9% overall and by 9.5% for seniors. The number of hospitals visits climbed last year, most notably by patients who were commercially insured and received outpatient treatments.
Patients filled an average of more than 12 retail prescriptions last year, up nearly 2% year over year. Those age 65 and older filled an average of 28 prescriptions annually, down slightly from 2012.
Meanwhile, patients with insurance are incurring higher out-of-pocket costs for health care services despite lower co-pays for many prescriptions and additional discounts for preventive medicines, the IMS research found.
Prescription drug costs paid by most patients are falling, with average out-of-pocket costs dropping below $5 for 57% of all retail prescriptions filled. At the same time, 30% of total patient out-of-pocket costs relate to just 2.3% of prescriptions, often high-cost specialty medications. Now 23% of prescriptions have no out-of-pocket costs, a dramatic rise in 2013 that was by common preventive medicines that include oral contraceptives, according to IMS.
The study also highlighted transformations in disease treatment. Patients gained access to 36 New Molecular Entities (NMEs) in 2013, including 10 new notable cancer treatments, which IMS noted marked the most in more than a decade. A total of 27 new oncology drugs have launched in the past three years.
In addition, clusters of innovation are transforming patient care in hepatitis C, multiple sclerosis and diabetes, as well as stroke and acute coronary syndrome.
Besides improved patient outcomes, these and other transformational treatments bring with them a shift in where costs are being incurred in the healthcare system – yielding the promise of fewer doctor office visits, fewer hospitalizations and reduced use of long-term care facilities, IMS pointed out.
Seventeen orphan drugs, developed for patient populations of fewer than 200,000 people, launched in 2013, the most in any year since the passage of the Orphan Drug Act in 1983, the study said. IMS added that the next decade promises a much faster approval process for drugs gaining the Food and Drug Administration's new Breakthrough Therapy Designation.