COVID-19 Pandemic Causes Dramatic Shifts in Prescription Drug Spending

April 26, 2021
Jill Murphy, Associate Editor

The report further showed that drug expenditure in nonfederal hospitals declined 4.6%, while drug spending in home care settings increased 13%, and drug expenditures in nonfederal hospitals spiked in the 3 weeks immediately following the March 8, 2020 lockdown.

According to the American Society of Health-System Pharmacists (ASHP)’s National Trends in Prescription Drug Expenditures and Projections for 2021, the COVID-19 pandemic heavily influenced spending on prescription drugs in the United States in 2020. Further, shifts in care related to the pandemic will continue to be a significant driver of drug expenditures in 2021, along with uptake in the use of biosimilars, a large pipeline of new cancer drugs, and increased approvals of specialty medications.

Prescription drug spending in 2020 grew at a moderate rate of 4.9% to $535.3 billion, whereas increased utilization drove the growth, which accounted for 2.9% of the total increase, spending on new drugs accounted for 1.8% of the increase, and price changes accounted for 0.3%.

"Reflecting the overarching impact of COVID-19 on health care, ASHP's drug expenditures report illustrates the factors that can impact hospital and health-system budgets," said Daniel J. Cobaugh, PharmD, FAACT, DABAT, vice president of publishing at ASHP and editor-in-chief of the American Jounal of Health-System Pharmacy, in the press release. "We provide this annual report to help hospital and health-system leaders, policy makers, and others understand drug expenditure patterns to anticipate future growth and spending."

The report further showed that drug expenditure in nonfederal hospitals declined 4.6%, while drug spending in home care settings increased 13%, and drug expenditures in nonfederal hospitals spiked in the 3 weeks immediately following the March 8, 2020 lockdown. Spending dropped quickly, remaining low for 19 weeks before rebounding, whereas the early weeks of the pandemic are removed from the data, with drug spending in hospitals showing modest growth compared to 2019.

Many effects of the pandemic are likely to persist over the rest of 2021 and could have a dramatic impact on drug expenditures into 2022, according to the study’s lead author Eric Tichy, PharmD, MBA, division chair, supply chain management at Mayo Clinic, Rochester, Minnesota.

"Hospital and health-system pharmacy leaders should expect to continue suffering from drug expenditure whiplash in 2021 and beyond as they manage the implications from COVID-19, including the commercial availability of new high-cost drug therapies and shifts in site of care throughout the evolution of the pandemic,” Tichy said in the press release.

In addition to these findings, hospitals and health systems are also likely to see a rebound of prescription drug expenditures resulting from higher utilization of acute care services due to patients’ reluctance to get preventative care during the pandemic, according to the study.

The report predicts that the expanded use of biosimilars over innovator products will serve as a powerful deflationary force on drug expenditures for the near future. Expected approvals of new biosimilars for adalimumab, ranibizumab, and pegfilgrastim in 2021 and 2022, will increase competition and may cause further reductions in expenditures, according to the study.

Other factors that are expected to influence prescription drug spending in 2021 include a large pipeline of new cancer drugs, the development of treatments for rare diseases, and expected FDA approval for special specialty drugs. In addition, the growth in spending on specialty drugs continues to outpace the rest of the market and could exceed 50% of overall drug expenditures in 2021, according to the study.

REFERENCES

New report finds COVID-19 pandemic causes dramatic shifts in prescription drug spending. EurekAlert! Published April 21, 2021. Accessed April 22, 2021. https://www.eurekalert.org/pub_releases/2021-04/aso-nrf042121.php