Industry Forecast Predicts Cost Increase for Health Systems Drug Purchases in 2020


Vizient, Inc. has released its July 2019 Drug Price Forecast, which projects that health systems can expect a 4.57% increase for pharmaceutical purchases made in 2020.

Vizient, Inc. has release its July 2019 Drug Price Forecast, which projects that health systems can expect a 4.57% increase for pharmaceutical purchases made in 2020. This includes projections for branded and generic drugs.

The Vizient Drug Price Forecast is based on data collected from Vizient's Pharmacy Program, which collates member participants' purchases in hospital and non-acute care settings. Inflation estimates are based on price change history over the last 36 months, as well as current knowledge of contract allowances and marketplace factors, such as expiring patents and anticipated new competition.

The key prediction is that pharmaceutical costs will continue to far exceed inflation and wage growth, continuing to make health care less affordable, according to the forecast. The cost of pharmaceuticals also will continue to be a large share of health care organizations' budgets.

There are other highlights from the report:

  • Specialty drug price inflation is predicted to be 4.23%. This prediction is similar to the overall drug inflation rate, but is relevant to health system leaders since prices of specialty drugs tend to outweigh prices for nonspecialty drugs. This prediction could affect the budgets of providers, who may need to increase their drug budgets in 2020.
  • The U.S. biosimilars market could change dramatically. Because the most relevant patents protecting rituximab, bevacizumab, and trastuzumab will expire in the third quarter of 2019, those biosimilar products could soon enter the market. Currently, those biologics account for over $10 billion in spending across the United States health care system, but adoption of biosimilars could be a strong tool combating the costs of therapies.
  • Drug shortages compromise patient care and result in higher costs, both directly and indirectly. Based on Vizient's national survey in March and April of 2019, the approximately 365 responding hospitals and health systems reported that the total cost of increased labor is calculated to be $359 million, equaling over 8 million labor hours dedicated to managing drug shortages in United States hospitals.
  • As the standard of care shifts to new therapy combinations, providers treating leukemia patients will experience higher costs. After the recent explosion in drug developments for acute myeloid leukemia (AML) and chronic lymphocytic leukemia (CLL), the number of options for patients at all stages of treatment has drastically increased. While this provides many more options for treatment, providers and patients can expect a financial impact due to the standard of care shifting from mostly inexpensive, generic agents to combinations of branded target agents.
  • Supply challenges will continue and prices will rise in the Immune globulin intravenous (IgIV) market. Although manufacturers are working to increase production and meet higher-than-expected demand, Vizient predicts that the supply of IgIV will still be limited for the remainder of 2019 and into the first half of 2020. New entrants into the market are not expected to have a large impact on this challenge, and prices are still predicted to rise steadily for immunoglobulin products. Albumin is the only exception with an abundant supply, and it will most likely see price reductions.

Other predictions in the report cover children's hospital association inflation, branded product inflation, and generic product inflation. The total weighted average estimate for drug price inflation in children's hospital associations is 3.35%.

Branded products are predicted to increase by 4.59% and generic products are the only predicted decrease, although it's small at 0.02%.

In a statement, Group Senior VP Dan Kistner said increasing market competition is the best way to control drug prices.

"Health care and pharmacy leaders must be cognizant of competition—in the form of generic drugs and biosimilars—and support their adoption as soon as they become available," Kistner said.


Vizient Drug Price Forecast Projects 4.57 Percent Increase in Hospital Drug Spending for 2020 [news release]. Irving, TX; August 6, 2019: Vizient website. Accessed August 6, 2019.

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