The United States drug spending has hit $425 billion in 2015, a new report revealed.
The IMS Institute for Healthcare Informatics report published today showed that U.S. spent $424.8 billion for drugs in 2015, a 12 percent increase from 2014. Net spending on prescription drugs in 2015 jumped by 8.5 percent to $309.5 billion, while net price for existing brands have an average rise of only 2.8 percent, which signified a reduced growth rate compared to previous years.
The agency theorized that the slowdown in drug spending could be due to the intense lobbying of insurance companies against specialty drugs for treatment of diseases such as hepatitis C. Pharmaceutical companies are then forced to give out rebates and other discounts so their new products can get into insurance formularies.
Senior VP and executive director of IMS Institute for Healthcare Murray Aitken said the 2015 shift in the market dynamics, including heightened competition, pushed manufacturers to embrace lower price increases.
Drug Spending Will Continue To Increase
Despite the lower drug spending for the past year, the agency acknowledges the drug market is still rapidly growing.
Using wholesale prices, the IMS report stated that drug spending will continue to increase by as much as 46 percent or $640 billion in the next five years. The agency took into account the number of research pipelines that are rife with new, experimental drugs that are expected to launch by 2020, particularly in oncology therapy.
In 2015, oncology drug spending accounted for $39.1 billion, an 18 percent growth from 2014. Autoimmune drugs accounted increased by almost 29 percent to $30.2 billion.
Aitken cleared that the price increases on the said drugs, although high, are still manageable as it will be compensated by reduced price increases for branded drugs.
"We have more people with health insurance (now), and that could be a reason we're having more uptake in brand-name drug use," said Aitken.
The Pharmaceutical Research and Manufacturers of America agrees with the IMS report that drug prices are moderating, which they attribute to aggressive negotiations from big purchasers and generic utilization rates of almost 90 percent.
Despite the dive in drug spending, politicians and consumers alike are still complaining of the price increase that are straining their budget to which IMS research director Michael Kleinrock agrees.
"Patients are facing high costs," Kleinrock said while pointing out that manufacturers are not pocketing all of the costs.
Government Solution
The agency is also looking at intensified competition with the introduction of "biosimilars" or cheaper versions of expensive drugs. So far, the Food and Drug Administration has approved development of two biosimilars.
Photo: Dominique Godbout | Flickr
