Sector News

Record new drug sales give a mega-boost to U.S. drug spending

April 15, 2015
Life sciences
Given the flood of numbers on hepatitis C treatment costs, it’s no surprise that U.S. drug spending took a leap last year. Given the news on specialty drug prices, it’s also no surprise that the biggest share of that growth came in that category of medications.
 
But the fact that U.S. drug spending was up more $43 billion last year, the biggest jump ever? That could turn some heads.
 
Spending on prescription drugs hit $374 billion in 2014, on a record-setting volume of 4.3 billion prescriptions filled, according to a closely-watched annual report from the IMS Institute for Healthcare Informatics.
 
That’s impressive. And compared with recent years, when patent losses depressed sales of branded drugs, the growth was a major departure. On a percentage basis, spending last year was up 13% overall and 10% per capita, compared with an overall increase of 3.2% in 2013, the IMS Health report notes.
 
A turnaround in new drug approvals helped fuel that growth. As IMS Health points out, the number of “transformative medicines” launched in 2014 was the highest in more than 10 years. Game-changing hepatitis C meds brought in more than $12 billion last year by themselves, and the entire crop of new meds contributed $20.3 billion to growth, a record number.
 
That makes new meds responsible for almost half of the $43 billion increase. Higher prices on branded drugs made an even bigger impact, accounting for $26 billion in additional spending, the report states. Expanded coverage under the Affordable Care Act–including Medicaid expansions–ramped up spending by about $1 billion.
 
Offsetting some of that growth were patent expirations on some top meds. That hit amounted to about $12 billion last year, even as the biggest drugs to lose patent protection–Teva’s Copaxone and AstraZeneca’s Nexium–escaped generic competition for the entire year. That $12 billion is a significant number, but far from the biggest patent-cliff hit; that would be $29.3 billion back in 2012.
 
By Tracy Staton
 

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