Prescription Drug Spending to Rise Significantly Through 2020

Pharmacy benefit managers found to help limit spending growth on branded drugs last year.

A study published by the IMS Institute for Healthcare Informatics outlines different reasons for the overall growth in healthcare costs in 2015 and predicts the healthcare market to grow significantly through 2020.

Spending on Prescription Drugs

Spending on prescription drugs in 2015 jumped to $309.5 billion, an increase of 8.5% from 2014.

The article also reported that the growth rate was about 2% from the previous year, which was the highest since 2001.

This spending was driven by new brands, greater use of generics, and an increase in brand volume, according to IMS.

Drivers of Growth

The price of brands already in the market increased only 2.8%, which is much lower compared with previous years. Comparatively, in 2014 the brands increased just 5.1%.

This small increase can be attributed to more competition among manufacturers and health plans, in addition to pharmacy benefit managers trying to limit cost increases, according to IMS.

More than half of the spending growth was from new brands. About $24.2 billion of this growth was spent on treatment for hepatitis C, cancer, diabetes, and other chronic conditions.

Generic prescriptions caused $7.9 billion worth of growth. According to the study, the price increase of older generics no longer drove growth in 2015.

Major Market Segments

Specialty treatments for cancer, hepatitis C, multiple sclerosis, and diabetes added $150.8 billion to total spending in 2015, which was an increase of 21.5% from 2014.

New cancer treatments alone contributed $39.1 billion.

Hepatitis C treatments were used to treat 250,000 people last year. Researchers stated that as the year progressed, treatments tapered off, which suggests that physicians worked through the patients with the highest needs first.

Treatment for multiple sclerosis contributed $17.7 billion, asmost patients are now prescribed new oral medications.

Diabetes treatment costs also rose $10.1 billion in total.

New Medications

In 2015, there were a total of 43 New Active Substances (NAS) launched. There were 30 other brands launched that were combination therapies, alternative dosing, or treatment administration options.

The article states that successful research and development can be attributed to the rising numbers of new drugs developed.

Among the NAS launches, there were advances in precision medicine, rare disease treatment, and chronic disease medications, the article also noted.

In addition, the first approval of a biosimilar drug followed by the submission of 7 new biosimilar applications withmany other biosimilars advancing through clinical development all occurred in 2015.

Prescription Volume

A 1% increase of filled prescriptions was seen in 2015, whichreached 4.37 million, compared with 2% growth in previous years.

Investigators also saw a decline in mail-order prescriptions, as more patients are now filling their prescriptions as generics through retail pharmacies.

Antidepressants and anti-diabetics increased 10%, while there was a 16.6% decline seen in narcotic prescriptions.

Patient Costs

An increase of $44 per prescription was seen for brand prescriptions, but the generic cost has stayed the same at $8 since 2010.

To combat rising costs, brand manufacturers are using savings programs, such as coupons, to help with manage out-of-pocket spending.

Even after applying coupons, most patients are still facing high out-of-pocket costs for brand prescriptions.

The article reports that some patients, like those with diabetes, have been able to reduce their costs to zero in 2015, the study found.

Healthcare Convenience Changes

A majority of states have experienced an increase in healthcare professionals dealing with Integrated Delivery Networks. This affiliation can be used to negotiate with insurers, increase pay performance initiatives, and more.

Urgent care facilities and pharmacy clinics grew by 115% in the past 5 years, which increases access and convenience for patients, IMS noted.

Prescriptions written by nurse practitioners and physicians assistants have doubled over the past 5 years. In 2015, 676 prescriptions were written by these non-physician practitioners.

Many states have expanded prescribing authority to non-physician practitioners due to a shortage of healthcare providers. Some states, however, are still restrictive.

Predictions Through 2020

By 2020, spending on prescriptions is estimated to be around $610-640 billion. Around $282 billion of this growth will be due to branded drugs, according to IMS.

Around $91 billion is predicted to come from new medications, especially those that treat cancer.

Researchers predict that while these brand prices will increase, there will be more rebates and discounts offered.

A predicted amount of 2320 new products and 43-49 NAS substances will be launched each year until 2020, the study concluded.