Michael Bartholow, PharmD, CACP

Medication spending grew by 12.2% in 2015, totaling approximately $425 billion. After adjusting for manufacturer rebates and price concessions, net spending totaled $309.5 billion, which was an increase of 8.5% over the previous year. This is a continuation of the historically high growth seen in 2014, although growth did slow by about 2%. Factors driving growth included new branded products, the increase in price and volume growth of brand products, and the lack of major patent expiries. Discounts and price concessions accounted for a 27.1% decrease in overall spending.

The top therapeutic classes, by volume, were antihypertensives, mental health medications, pain medications, antibacterials, and lipid regulators. Diabetes medications was the top class by nondiscounted spending, followed by oncology and autoimmune disorders medications. Levothyroxine, lisinopril, acetaminophen/ hydrocodone, atorvastatin, and metoprolol were the most commonly prescribed medications, and the top earning agents were Harvoni, Humira, Enbrel, Crestor, and Lantus SoloStar. Over 80% of prescriptions dispensed were written for unbranded generics, but branded medications accounted for over 70% of nondiscounted spending.

Five majors factors drove spending growth in 2015: new brand spending, brand price increases, brand volume growth, generic spending, and patent expiries. Spending on new brand products rose by $24.2 billion, accounting for over half of the total spending growth in 2015. This marks the second straight year of record growth for new brand products. Specialty medications accounted for 67% of the new brand spending growth. These include new treatments for hepatitis C, HIV, multiple sclerosis, autoimmune disorders, and cancer. Traditional medicines, such as agents targeting diabetes and human papillomavirus infection, contributed 33% to new brand spending growth.

Prices for protected brands increased by 12.4%, which is down from 14.3% in 2014. Major net price decreases were seen in the areas of diabetes, hepatitis, and pain, whereas prices rose for therapies for autoimmune disorders, multiple sclerosis, and oncology. After price concessions from manufacturers, the net price increase was 2.8%, marking a significant slowing of growth. It is estimated that manufacturer price concessions offset price growth of branded products by up to 81%.

Volume growth of protected brands added to spending growth for the first time since 2007, contributing $2.7 billion in total spending. Areas of positive growth included autoimmune diseases, cancer, blood clots, and mental health disorders. Lower utilization of other agents, including antibacterials, lipid regulators, and pain medications, offset spending growth of protected brands by $3.8 billion. These volume declines may have resulted from shifts to newer brands, generic alternatives, and policy changes targeting more responsible utilization of antibiotics and prescription painkillers.

Generic spending grew by 7.4% in 2015, totaling $114.1 billion. Branded generics contributed 45% ($3.5 billion) of generic spending growth and accounted for 40% of overall generic spending. Older generics added $0.5 billion to spending growth. Major contributors to generic spending in 2015 included aripiprazole, esomeprazole, and celecoxib.

Patent expiries in 2015 accounted for a $14.2- billion reduction in spending in 2015. By comparison, the decline in spending due to patent expiries was about $2 billion less in 2014, but far greater in 2012 and 2013, when patent expiries accounted for declines of $32.6 billion and $20.5 billion, respectively. Major patent expiries in 2015 were Abilify, Nexium, Namenda, and Copaxone. Patent expiries in 2014 also contributed to lower spending in 2015.

Specialty medications have contributed 70% to the overall spending growth of the past 5 years and have accounted for 36% of all nondiscounted spending. In 2015, spending on specialty medications rose by 21.5%, reaching $150.8 billion. Spending on treatments for hepatitis, oncology, and autoimmune diseases added $19.3 billion in growth. The number of new patients seeking hepatitis C treatments has grown 5-fold in the past 2 years, and nearly 250,000 new patients received therapy in 2015. Multiple sclerosis and HIV spending increased by 17.6% and 15.7%, respectively.

Multiple sclerosis medications added $17.7 billion in spending and were more heavily utilized in female patients and in patients 40 years and older. About half of multiple sclerosis new treatment starts were prescribed oral medications instead of injectable medications.

Spending on diabetes medications grew by $10.1 billion, but $8.6 billion was offset by rebates and discounts. Insulin price and volume growth added $4.8 billion, whereas dipeptidyl peptidase- 4 inhibitors added $1.4 billion, sodium-glucose cotransporter-2 inhibitors added $2 billion, and glucagon-like peptide-1 agonists added $1.2 billion. Spending for glitazones has diminished significantly due to safety concerns, dropping from $4.4 billion in 2011 to $166 million in 2015.

Seventy-three new brands were released in 2015, 43 of which were new active substances (NASs). Fifteen orphan drugs were introduced, most of which have oncology indications; the remainder target rare diseases. Other innovative products included treatments for heart failure, cholesterol, and hypoactive sexual desire disorder in women. Thirty new non-NAS agents also were launched, including therapies for pancreatic cancer and hepatitis C.

Over the past 10 years, the top 3 areas for NAS launches have been oncology, infectious diseases, and neurologic disorders. Oncologics accounted for over one-third of NAS launches in 2015, and the majority of recently released agents have been targeted therapies designed to be more precise in targeting gene mutations in cancer cells while being less toxic to surrounding healthy tissue. More than 40 targeted oncologic drugs have been launched within the past 5 years, 14 of which were introduced in 2015 alone. Also, 10 additional indications were approved by the FDA in 2015 for targeted oncology drugs that had gained first approval within the past 5 years. The number of indications granted by the FDA, both first approvals and subsequent approvals, for targeted oncology medicines was higher in 2015 than in any previous year.

The first immune-oncology programmed death-1 inhibitors, pembrolizumab and nivolumab, were introduced in late 2014. Since then, volume of use has grown rapidly. There have been over 135 clinical trials for additional indications for the 2 currently approved agents; additional agents are in late-stage development. The first biosimilar, Zarxio, was approved in March 2015; the first nonoriginal biologics, Granix and Omnitrope, were approved previously. By the end of 2015, 7 biosimilar applications were pending.

Total prescription volume increased by 1% in 2015. Demand increased for antidepressants, diabetes agents, respiratory agents, and antiepileptics. Demand for lipid regulators declined overall, with demand for branded statins shifting in favor of generic atorvastatin. Demand for narcotic pain medications fell by over 16 million prescriptions. Prescription volume growth has been driven by the expansion of insurance coverage through Medicaid and health exchange plans, although that growth has been offset by fewer prescriptions being filled by patients with commercial insurance coverage.

Patient cost exposure for branded medicines has steadily risen since 2011 and reached an average of $44 per prescription in 2015; the average patient cost exposure of generic drugs has been around $8 since 2010. About 17% of brand prescriptions have a patient cost exposure of more than $50, whereas about 24% of brands have a $0 patient cost exposure. Manufacturers have offset the rise in patient cost exposure through coupons and other patient savings programs, keeping final patient costs fairly stable. Patient savings programs are often highest during the first quarter of the year, helping to offset insurance deductibles. Patients with pharmacy deductibles have a high cost exposure even after patient savings programs, with over 10% of total claims and 40% of claims for brand prescriptions having cost exposures above $50.

Health care professional affiliation with integrated delivery networks (IDNs) has increased in most states since 2010, helping IDNs to increase their negotiating power and drive pay-for-performance initiatives. Over 54% of all health care providers are affiliated with IDNs, although there is still significant variation from state to state.

Access to lower-cost nonemergency care has increased over the past 5 years, as the number of urgent care centers has grown by 150% and pharmacy in-store clinics has increased by 50%. About 70% of urgent care centers are run independently, whereas over 80% of acute care hospitals are affiliated with IDNs.

US spending is projected to increase by 46% over the next 5 years, reaching $610 billion to $640 billion by 2020. Adjusted net growth is expected to be 4% to 7% in 2020, reaching $370 billion to $400 billion. Growth will continue to be driven by the utilization and continued price increases of protected brands, as well as the introduction of new brands and the relatively low impact of patent expiries. The Affordable Care Act will impact spending through expanded insurance coverage, coordination of services, and value- based payment contracting.

Net brand spending growth is expected to drop by $115 billion, totaling $167 billion. As a result, absolute growth will be reduced by 41%. Between $65 billion and $70 billion of net brand growth is expected to result from new medication launches, whereas existing brands will contribute $36 billion through increased use. Price increases of existing brands will be largely offset by discounts and rebates through 2020.

New brand launches will continue to increase spending, as the late-phase research and development pipeline includes over 2300 novel products focused in areas such as oncology, pain, Alzheimer’s disease, epilepsy, dermatology, and vaccines.

Dr. Bartholow is a clinical pharmacist in the VA Southern Nevada Healthcare System in Las Vegas, Nevada.

Medicines use and spending in the US: a review of 2015 and outlook to 2020. IMS Institute for Healthcare Informatics website. imshealth.com/en/thought-leadership/ims-institute/reports/medicines-use-and-spending-in-the-us-a-review-of-2015-and-outlook-to-2020. Accessed June 2016.

Articles

Medication spending grew by 12.2% in 2015, totaling approximately $425 billion.

Top Drugs of 2015

This analysis of the top drugs by prescriptions dispensed and total sales reveals key trends in today’s pharmaceutical market.

Spending on medications in 2014 grew at the highest rate seen in more than a decade. Innovations in new medications, list price increases, and the impact of several patent expirations combined to increase nominal spending by more than 13%. Implementation of the Affordable Care Act (ACA) and integrated health care networks shifted the demand and payments for medications, while FDA incentives and research and development efforts refocused on specialty medications led to the introduction of many new drug therapies.

Medication Spending and Health Care Costs

Medicine spending rose by 13.1% and per capita spending increased by 10.3%, which was the largest increase seen since 2001. Nominal spending totaled $373.9 billion in 2014 compared with $329.2 billion in 2013. Spending on pharmaceuticals grew between 1997 and 2003 due to the launch and increased use of a large number of blockbuster drugs, but declined over the past decade due to slower volume growth, high levels of expired patents, increased use of generic drugs, and lesser spending on new drugs.

In 2014, spending growth was driven by price increases, new brand medications, and the diminished impact of patent expiries. Patent expirations were at their lowest level in 5 years. This resulted in an $11.9 billion reduction in total spending in 2014, which was $8 billion less than the spending decline seen in 2013 and $17 billion less than in 2012. A large portion of these declines in spending resulted from the loss of exclusivity for Cymbalta in 2013 and Celebrex in 2014. In addition, Nexium has been off patent since May 2014, but the FDA revoked Ranbaxy’s exclusive right to market a generic alternative due to safety concerns and granted approval to Teva’s version instead.

Despite the reduced patent expiry impact, generics account for 88% of dispensed prescriptions, having increased by 2% in 2014. The following also occurred: Diovan sales totaled $3.8 billion in the 21 months following patent expiry in September of 2012, but faced generic competition in June of 2014, and Neupogen lost 11% in sales volume in 2014 due to the launch of Granix in late 2013.

Spending on new brand medications more than tripled from 2013 to 2014, increasing from $6.5 billion to $20.2 billion, while spending on protected brands increased by $25.6 billion, driven by invoice price increases and offset slightly by the decline in the volume of protected brand products. Brand invoice price changes accounted for $26.3 billion in spending, contributing 8.2% to overall growth in 2014. Invoice price increases on protected brands averaged about 13.5%, but after adjusting for rebates and discounts, the net price increase is estimated to have been $10.3 billion, or 3.1% of total spending growth.

Spending on specialty medications increased by $54 billion over the past 5 years and now accounts for one-third of total medication spending. In 2014, specialty medication spending alone increased 26.5% to total $124.1 billion and the medications accounted for 78% of total new brand spending as research and development continued to shift focus toward specialty disease states. Hepatitis C treatments were the largest driver of this specialty spending growth, garnering $12.3 billion. Meanwhile, spending on multiple sclerosis rose by 24.4%, oncology by 16.8%, and autoimmune by 24%.

Demands for Health Care and Changes in Payment

The ACA expanded Medicaid and established health insurance exchanges to extend health insurance coverage to previously uninsured individuals. Enrollment began in late 2013, and the peak impact of new enrollees became most evident in the second quarter of 2014. The uninsured rate decreased by 5.1% while 15.7 million individuals gained coverage either through employment, Medicare, or the Medicaid expansion and health exchanges. Outpatient visits and inpatient hospital stays declined by 3% and 6.2%, respectively. Emergency department visits increased by 1.4%, driven by the increased number of Medicaid patients, but at a slower rate than new enrollment in the expansion programs. Dispensed prescriptions increased by 2.1%.

Integrated health networks have grown substantially in recent years and are now affiliated with 80% of hospitals and 70% of doctors nationwide. These networks help to standardize protocols and reduce treatment variables. Despite their growth, however, the overall US health care system remains highly fragmented and almost 75% of prescriptions are written by providers outside of the integrated networks.

Retail prescription volume increased by 2.4%, with 70% of the growth driven by Medicaid recipients. Medicaid prescriptions increased by 16.8% overall, with 25.4% growth in states that had expanded Medicaid coverage, but only 2.8% in states that did not expand Medicaid. Prescriptions filled at retail pharmacies by commercially insured patients, including those who purchased coverage on health exchanges, fell by 8.4 million, while cash prescriptions declined by 5.5%. Medicare Part D patients filled nearly 1 billion prescriptions in retail pharmacies.

Insurance coverage has trended toward higher deductibles and capped out-of pocket expenses. High deductibles create cost sensitivity among patients and often influence adherence to treatment. Adherence has been shown to worsen once costs exceed $30, and patients with a deductible averaged 25 fewer days of therapy compared with patients on a standard insurance plan.

The number of new medications launched in 2014 was at its highest level since 2001. There were 42 new active substances launched, 7 of which had new mechanisms and 18 with orphan indications (9 of these treatments target diseases afflicting fewer than 10,000 patients). The 18 orphan drugs was the highest number on record. There have been 61 orphan drugs launched in the past 5 years—more than any other 5-year period since the Orphan Drug Act was passed in 1983. A variety of new drug launches for larger disease states was introduced to improve efficacy and dosing, and 29 new brands were based on existing medications.

FDA incentive programs encouraged treatment development for high-need populations. More than 40 breakthrough therapy designations were approved in 2014, and 10 medications were launched. Drugs designated as “breakthroughs” can be launched within a month and quickly made available to vulnerable patient populations. The increasing number of designation requests will likely continue the growth of breakthrough therapies for years to come.

FDA incentives have also fostered a substantial pipeline of new medicines in late-stage development. Over 532 distinct research programs are in late stages of development for the US market, and 60% or more are expected to get to market. The launch trajectory is expected to peak over the next 2 years and will remain elevated over the next 5 years.

The pathway for FDA approval of biosimilar agents was established by the 2009 Biologics Price Competition and Innovation Act, and the first approvals through that pathway were seen in 2014. There are several agents currently in late-stage trials or pending biosimilar approval with the FDA, and a slow and steady increase of the number of agents coming to market is expected.

The Generating Antibiotic Incentives Now Act of 2012 incentivized the development of treatments targeting antimicrobial-resistance. Five new agents were launched in 2014, 4 of which received a Qualified Infection Disease Program designation.

		Medicine Use and Spending Shifts. IMS Institute for Healthcare Informatics website. http://www.imshealth.com/portal/site/imshealth/menuitem.762a961826aad98f53c753c71ad8c22a/?vgnextoid=3f140a4331e8c410VgnVCM1000000e2e2ca2RCRD&vgnextchannel=736de5fda6370410VgnVCM10000076192ca2RCRD&vgnextfmt=default. Accessed June 2015.

		Medicine use and shifting costs of healthcare. IMS Institute for Healthcare Informatics website. www.imshealth.com/deployedfiles/imshealth/Global/Content/Corporate/IMS%20Health%20Institute/Reports/Secure/IIHI_US_Use_of_Meds_for_2013.pdf. Accessed June 2014.

This analysis of the top drugs by prescriptions dispensed and total sales reveals key trends in today's pharmaceutical market.

Top Drugs of 2014

Total spending on prescription drugs in the United States rebounded sharply from 2012. Although growth remains at a historically low level, nominal spending rose dramatically due to fewer patent expiries, new drug therapies, and higher utilization of health care services. Out-of-pocket costs have a significant impact on patient behaviors and help to shift the trends in health care spending.

The top 5 therapy classes accounted for more than one-third of spending in 2013. Oncologics continue to be the highest earning class of medications ($27.9 billion), followed by antidiabetics ($24.3 billion), mental health ($23.8 billion), respiratory agents ($20.4 billion) and pain ($18.7 billion). The fastest growth was seen in treatments for multiple sclerosis (20.7%), autoimmune disorders (18%), and nervous system disorders (16%), while 4 of the top 10 earning classes actually had declines in growth of more than 5%. Patent expiries were fewer and less significant in 2013, with Cymbalta being the only $1 billion agent losing patent protection; however, spending declined by over 15% for both anticoagulants and lipid regulators due to patent expiries. Antihypertensives continued to be the highest in prescription volume, with 45.7 million patients receiving therapy and 698 million prescriptions dispensed. Other classes leading in total prescriptions dispensed include mental health, pain, antibacterials, and lipid regulators.

Abilify was the highest earning agent, as nondiscounted spending for the drug increased from $5.7 billion in 2012 to $6.5 billion in 2013. Other top earners included Nexium ($6.2 billion), Humira ($5.6 billion), Crestor ($5.4 billion), and Cymbalta ($5.3 billion). Acetaminophen/ hydrocodone was the most widely dispensed prescription, followed by levothyroxine, lisinopril, metoprolol, and simvastatin.

Health care utilization grew in 2013, reversing the trends of self-rationing and declining spending seen in recent years. The total number of patient office visits in 2013 increased by 2.7%, largely due to increased utilization by seniors and adults visiting specialists. Hospital admissions increased by 2.6% overall. Scheduled inpatient admissions grew by 10.5%, while inpatient admissions via the emergency department (ED) declined by 14.6%. ED day visits grew modestly by 1.8%, down from the 6.2% growth increase seen in 2012.

Prescription demand increased by 1.6% overall in 2013, a 0.9% per capita increase. Utilization among the largest portion of per capita users, patients 65 years and older, declined by 1%, with a per capita decrease of 2% for patients 80 years and older. Antihypertensive agents and mental health therapies grew in volume by 1.1% and 1.7%, respectively. Prescriptions for nervous system disorders grew by 5.9%, largely attributed to the use of gabapentin across a broad range of indications. Hormonal contraceptives grew by 4.6%, as the proportion of patients with a $0 copay rose from 20% to 50%. The utilization of pain medications and lipid regulators declined by 1%, while antibacterial utilization decreased by 1.4%.

Medication spending has grown at historically low levels in recent years and has steadily declined since 2009. In 2012, nominal and per capita spending growth shrank by 1% and 3.5%, respectively. Things improved in 2013, as nominal spending grew by 3.2% and per capita spending growth increased by 1%. The increase in nominal spending can be attributed largely to the reduced impact of patent expiries in 2013, which was $10 billion less than in 2012. Additionally, higher per capita utilization of health care services and spending on newer agents contributed to spending growth.

While generics and branded generics represent 86% of the prescriptions dispensed in 2013, they account for on 29% of total spending. Spending on branded drugs accounted for 71% of total spending, or $232 billion. Biologic medications account for 28% of total spending, growing by 9.6%, and spending on specialty medications grew by 9%, to 29% of total spending. Price increases on branded products accounted for $20 billion in growth, and after adjusting for discounts and rebates, net price growth accounted for 5.1% of brand spending growth.

Insurance plans have been shifting to high-deductible health plans (HDHPs), although preferred provider organizations (PPOs) are still the most popular health plan option for employer-based coverage. HDHPs are generally characterized by lower premiums and high deductibles, in which patients pay the full cost of health care until they reach a predetermined threshold. Out-of-pocket spending tends to be significantly less with HDHPs, which may be due to the visible direct costs experienced by patients during the deductible period. Many plans also offer in-network versus out-of-network deductibles to encourage patients to use in-network services.

While out-of-pocket costs for patients have increased overall, more than 75% of prescriptions dispensed in 2013 cost patients $10 or less. More than 50% of prescriptions cost less than $5, and over 20% had no copay. The majority of nocopay prescriptions came from 1 of 5 therapy areas: contraceptives, antihypertensives, respiratory medications, cholesterol medications, and mental health medications. The Affordable Care Act preventive care provisions took effect for most beneficiaries in January 2013, and included a $0 copay for contraceptives. Generic medications accounted for most of the prescriptions under $10, while brands typically cost patients more than $20. Three-fourths of out-of-pocket costs were attributed to prescriptions costing more than $10. The top 2.3% of prescriptions cost patients $70 or more and accounted for 30% of the total out-of-pocket spending in 2013. Most of the top copays came from plans with coinsurance, charging patients a set percentage of high-cost specialty medications, but often plans have a cap on patient out-of-pocket costs. Some manufacturers offer coupons or savings programs for branded products to help offset high out-of-pocket costs, although these programs are often limited to 12 to 24 months.

There were 36 New Molecular Entities (NMEs) introduced in 2013, which was the highest number in the past decade and likely marks a trend for the coming years. The number of approvals for orphan drugs, designed to treat rare diseases affecting fewer than 200,000 patients in the United States, more than doubled since 2012 and was the highest of any year since the Orphan Drug Act was passed in 1983. Among these orphan drugs were 7 “ultra-orphan” agents, which target conditions affecting only a few thousand patients each year.

Eight of the NMEs released in 2013 were new dosage forms and additional uses of existing mediations, focusing on improvements in dosing and administration. These included an antipsychotic agent administered via inhalation, oncedaily forms of diabetic mediations, and an epinephrine autoinjector that provides audible administration instructions to the patient.

Oncology and specialty medications accounted for most NMEs launched in 2013. Ten oncology NMEs made available last year, which is the most in the past 10 years. Among the new agents was obinutuzumab, the first FDA Breakthrough Designated Therapy, which targets chronic lymphocytic leukemia, and adotrastuzumab emtansine, dubbed the “smart bomb” for metastatic breast cancer. In the past 5 years, 35 new cancer therapies have been introduced, 30 of which have been targeted therapies. There were 20 specialty medications launched last year, including agents targeting hepatitis C (sofosbuvir, simeprevir), HIV (dolutegravir), type 2 diabetes (canagliflozin), and multiple sclerosis (dimethyl fumarate). Spending on new brand medicines totaled $10.9 billion in 2013, 69% of which was spent on new specialty medications.

Over the next 10 years, drugs gaining the new FDA Breakthrough Therapy Designation will be expedited to serve patients in critical need. Over 30 medications were given Breakthrough designations in 2013, and 3 drugs were granted Breakthrough approval. These innovative new therapies will improve quality of life, focus on unmet needs, and transform treatment areas such as hepatitis C, multiple sclerosis, and cystic fibrosis.

Top 20 Brand/Generic Products by 2013 Sales

Medicine use and shifting costs of healthcare

. IMS Institute for Healthcare Informatics website. www.imshealth.com/deployedfiles/imshealth/Global/Content/Corporate/IMS%20Health%20Institute/Reports/Secure/IIHI_US_Use_of_Meds_for_2013.pdf. Accessed June 2014.

Top Drugs of 2013

An analysis of the top 200 drugs by prescriptions dispensed and total sales reveals key trends in today's pharmaceutical market.

Prescription drug sales in the United States in 2011 demonstrated both a continuation of recent market trends and important new developments in the treatment of several disease states.

Growth in spending has been slow over recent years, and 2011 was no exception. Total health care spending reached $320 billion, an increase of approximately $50 billion since 2006 and $125 billion since 2002.

 This represents an increase in nominal spending of 3.7%, which falls in line with the trend of annual growth of 5% or less since 2007. When adjusted for gross domestic product and population growth, this is a per capita increase of 0.5%. Factors contributing to the minimal growth in spending include declining volume growth, decreased spending on new drugs, and the continued shift from branded to generic products.

Sales within 5 leading therapy areas accounted for nearly one-third of total spending in 2011.

 Oncologics accounted for $23.2 billion in spending, an increase of 4.2%. Respiratory agents grew by 8.8% to $21 billion, with anti-asthmatics accounting for two-thirds of class spending. Lipid regulators earned $20.1 billion, a 7.2% increase.

 Lipitor (atorvastatin) was the single largest earning source in this class, but nearly 60% of prescriptions were switched to a generic alternative when the patent expired in November 2011.

 Spending on antidiabetic agents reached $19.6 billion, up 10.7%. Antipsychotics garnered $18.2 billion in spending, although 2 top-performing agents in the class face patent loss: Zyprexa (olanzapine) in October 2011 and Seroquel (quetiapine) in early 2012.

 Spending increased significantly in several areas, including multiple sclerosis (22.5%), attention-deficit/hyperactivity disorder (ADHD) (17%), and non- HIV—targeting antivirals (14.8%).

Overall medication utilization per capita declined, along with total office visits and non-emergency department hospital admissions. Medication use per person dropped by 1.1%, whereas prescription usage in the retail setting declined in 41 states, largely due to a reduction in chronic medication use.

Conversely, the number of emergency department admissions increased significantly in 2011, possibly as a consequence of the high number of long-term unemployed people without insurance. These trends demonstrate a shift from lowercost, nonemergency medical care towards more costly emergency care, which is likely to contribute to the rising overall costs of the US health care system.

Seniors continued to be the largest consumers of prescription medications, although the total number of prescriptions for patients 65 years of age and older declined for a second straight year. Prescription volume dropped by 2.7% in 2010 and by 3.1% in 2011, a sharp contrast to the average volume increase of about 4% seen in the preceding years. The largest declines in prescription volume among patients 65 years and older were seen in antihypertensive medications, osteoporosis medications, and lipid regulators.

Alternatively, prescription use increased among individuals aged 19 to 25 years, “which coincides with the first full year of implementation of the provision of the ACA [Affordable Care Act] allowing individuals under 26 years ofage to remain on their parents’ health insurance.”

 Therapies with the largest increases among this age group included ADHD and antidepressants.

Out-of-pocket medication spending fell for the first time on record, declining by approximately $1.8 billion in 2011. Patients insured by commercial thirdparty companies paid roughly 78% of the total out-of-pocket costs. The average copay was $10 or less for 75% of all retail prescriptions. Copays for branded products cost up to $40 on average, and although brands only accounted for about 18% of total prescription volume, they represented 46% of out-of-pocket costs. Use of copay coupons and vouchers increased as well, helping to offset some of the higher costs associated with branded products.

Total spending among Medicaid patients and commercially insured patients remained relatively flat compared with 2010; however, spending by Medicare Part D beneficiaries decreased from $11.5 billion to $9.7 billion. This is largely a result of the “donut-hole” subsidy provided by the ACA.

Use of branded medications continued to decline, whereas generic alternatives grew to represent 80% of total prescriptions dispensed. Several key patent expirations contributed to a reduction of about $14.9 billion in spending on branded products.

 Major products affected by patent loss in 2011 include Lipitor, Advair Diskus (fluticasone propionate and salmeterol), Zyprexa, Levaquin (levofloxacin injection), and Concerta (methylphenidate). Each of these products had accounted for more than $1 billion in annual spending in the 12 months prior to their patent expiry.

The total savings in health care costs attributed to patent expiries, known as the “patent dividend,” grew to $65.2 billion since 2007.

 This number does not fully reflect savings associated with patent expiries that occurred late in the year, and more adequately reflects savings from expiries that occurred in late 2010 and early 2011, including Lovenox (enoxaparin injection), Aricept (donepezil), and Effexor XR (venlafaxine hydrochloride).

Major upcoming patent expiries include Actos (pioglitazone), Singulair (montelukast), and Nexium (esomeprazole) (Table).

Spending on branded medications represented 73% of total spending in the United States. Declining volume in brands resulted in a reduction of $5.6 billion in spending. This number was offset by a pricing increase of $18.5 billion, or an estimated $12.6 billion after adjusting for discounts and rebates. Spending on new brands (products available for less than 24 months) increased from $7.5 billion in 2009 to $12.2 billion in 2011.

A total of 34 new molecular entities were launched in 2011, the largest number in the past decade. A variety of new treatments became available, targeting diseases affecting millions of chronically ill patients as well as orphan diseases that affect fewer than 200,000 individuals. Notable developments include agents targeting hepatitis C (boceprevir, telaprevir), multiple sclerosis (fingolimod), stroke prevention (dabigatran, rivaroxaban), melanoma (ipilimumab, vemurafenib), prostate cancer (sipuleucel-T), and nonsmall cell lung cancer (crizotinib). These new treatment options may impact the care of more than 20 million patients with existing conditions as well as the estimated 2.5 million patients who are newly diagnosed each year.

Several key elements within the current political and economic climate of the United States will significantly influence the growth of medication spending over the next few years. The ACA, for instance, is a highly controversial law that has dramatically affected out-ofpocket spending, access to health care, and the brand/generic shift. Although the US Supreme Court ruled in favor of upholding the ACA, the debate will remain a central issue during the 2012 government elections.5,6 Likewise, the thus-far slow economic recovery, high unemployment levels, and limited access to affordable health insurance are closely tied to overall health care spending and will remain key variables in the drug sales market.

Although 2011 showed promise with the introduction of many novel therapy options, manufacturers face growing pressure to find new products to offset the loss of top performers. “This is a sobering reversal for an industry that just a few years ago was the world’s most profitable business sector but is now under pressure to reinvent itself and shed its dependence on blockbuster drugs,” reported Doug Wilson of 

 And it casts a spotlight on the problems drug companies now face: a drought of big drug breakthroughs and research discoveries; pressure from insurers and the government to hold down prices; regulatory vigilance and government investigations; and thousands of layoffs in research and development.”

But despite all obstacles, companies including Pfizer, Merck, Eli Lilly, and Teva posted higher-than-expected earnings for the first quarter of 2012, proving that growth is still possible in a tough market.

 It remains to be seen whether this growth can be sustained in the months ahead.

Click on the image below to download a printable PDF of the Top 200 Products of 2011 by Total Dollars: 

Click on the image below to download a printable PDF of the Top 200 Products of 2011 by Total Prescriptions: 

1. IMS Institute for Healthcare Informatics. The Use of Medicines in the United States: Review of 2011. IMS Institute for Healthcare Informatics Web Site. June 2012. http://www.imshealth.com/ims/Global/Content/Insights/IMS%20Institute%20for%20Healthcare%20Informatics/IHII_Medicines_in_U.S_Report_2011.pdf. Accessed June 23, 2012.

2. Bartholow, M. Top 200 prescription drugs of 2010. Pharmacy Times Web site. June 2012. http://www.pharmacytimes.com/publications/issue/2011/May2011/Top-200-Drugs-of-2010. Accessed June 23, 2012.

3. Pierson, R. Pfizer profits solid despite Lipitor loss. Reuters.com Web Site. May 1, 2012. http://www.reuters.com/article/2012/05/01/us-pfizer-idUSBRE8400KJ20120501. Accessed June 25, 2012.

4. Alazraki, M. The 10 Biggest-Selling Drugs That Are About to Lose Their Patent. DailyFinance Web Site. February 27, 2011. http://www.dailyfinance.com/2011/02/27/top-selling-drugs-are-about-to-lose-patent-protection-ready/. Accessed June 23, 2012.

5. Affordable Care Act. HealthCare.gov website. http://www.healthcare.gov/law/index.html. Access June 23, 2012.

6. Chan, S. Updates on Supreme Court Health Care Ruling. Seattle Times Web Site. June 28, 2012. http://seattletimes.nwsource.com/html/edcetera/2018550273_updates-supreme-court-health-care.html. Accessed June 28, 2012.

7. Wilson, D. Drug Firms Face Billions in Losses in ’11 as Patents End. New York Times Web Site. March 6, 2011. http://www.nytimes.com/2011/03/07/business/07drug.html?_r=1&pagewanted=all. Accessed June 25, 2012.

8. Teva profit beats forecasts on U.S. drug sales. Reuters.com Web Site. May 9, 2012. http://www.reuters.com/article/2012/05/09/us-teva-idUSBRE8480A520120509. Accessed June 25, 2012.

9. Fontevecchia, A. Merck Beats As Singulair Rakes In The Cash, But Patents Expire Soon. Forbes Web Site. April 27, 2012. http://www.forbes.com/sites/afontevecchia/2012/04/27/merck-beats-as-singulair-brings-in-the-cash-but-patents-expire-soon/. Accessed June 25, 2012.

10. FDA Listing of Authorized Generics as of January 9, 2012. FDA Web Site. January 9, 2012. http://www.fda.gov/downloads/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/UCM183605.pdf?utm_campaign=Google2&utm_source=fdaSearch&utm_medium=website&utm_term=concerta%20generic&utm_content=11. Accessed June 23, 2012.

11. UPDATE 1-Watson Pharma signs generic drug deal with JNJ unit. Reuters Web Site. November 2, 2010. http://www.reuters.com/article/2010/11/02/watsonpharma-idUSSGE6A10IX20101102. Accessed June 23, 2012.

12. AstraZeneca Settles US Nexium Patent Litigation with Ranbaxy. Drugs.com Web Site. April 15, 2008. http://www.drugs.com/news/astrazeneca-settles-us-nexium-patent-litigation-ranbaxy-8072.html. Accessed June 22, 2012.

13. FDA News Release. FDA Approves First Generic Effexor Extended Release Capsules to Treat Major Depressive Disorder . FDA Web Site. June 29, 2010.http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/2010/ucm217624.htm?utm_campaign=Google2&utm_source=fdaSearch&utm_medium=website&utm_term=effexor&utm_content=6. Accessed June 22, 2012.

14. FDA News Release. FDA approves first generic versions of the antibiotic levofloxacin to treat certain infections. FDA Web Site. June 20, 2011. http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/2011/ucm259951.htm?utm_campaign=Google2&utm_source=fdaSearch&utm_medium=website&utm_term=levaquin%20generic&utm_content=1. Accessed June 22, 2012.

15. FDA News Release. FDA Approves First Generic Enoxaparin Sodium Injection. FDA Web Site. July 23, 2012. http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/2010/ucm220092.htm?utm_campaign=Google2&utm_source=fdaSearch&utm_medium=website&utm_term=lovenox%20generic&utm_content=1. Accessed June 22, 2012.