Payer, consumer pushback expected to dampen drug spending growth
- Payers' increased negotiating power, as well as consumer pushback on high-priced prescription medications, stand to dampen drug spending over the next five years, according to a new report from QuintilesIMS, a healthcare information and technology provider.
- QuintilesIMS researchers anticipated gross spending on treatments will reach up to $610 billion in 2021, with 40 to 45 new products launching each year between now and then, indicating that the well is far from drying up for the pharmaceutical industry.
- But pressure from insurers and competitors is limiting how much money medicine buyers shell out. Last fall, drug spending was expected to grow 6-9% annually through 2021, but has been pared down to the 4-7% range due in particular to "weaker than expected new product spending and a slowing of invoice price increases for branded products."
Similar to other reports, QuintilesIMS explained how drug spend differs under the lenses of gross and net spending. In 2016 for example, gross spending increased 5.8% to $450 billion. However, net spending — which takes into account rebates and discounts negotiated by payers, pharmacy benefit managers and healthcare agencies — rose 4.8% and totaled $323 billion.
While the notion isn't new that negotiations hamper net drug spending growth, this most recent report underscores just how much money is at stake. Last year alone, discounts and rebates whittled away 62% of price increases for branded products.
Researchers also identified trends relating to therapeutic areas and patient access to medications.
Products that were relatively new to market — meaning they have been available to consumers for two years or less — were the biggest bump for net spending. Spending on those drugs rose $15.9 billion in 2016 in spite of a nearly $2 billion decline in spending for new hep C treatments as more patients became effectively cured.
More money is expected to go toward specialty medications, especially for autoimmune diseases, cancer and HIV. Specialty drug spend was responsible for 42% of new drugs' net spending growth.
On the patient side of things, the number of prescriptions dispensed last year increased 3.3% to 4.4 billion, the largest increase seen since 2012. Consumers aged 50 and older were responsible for 70% of those prescriptions, while young patients were also increasing their use of medications.
"The usage of medicines by patients has continued to rise, as many have wider access to insurance and low cost generic medicines, while a minority of patients face substantial out-of-pocket costs and experience a dramatically different trend in their spending on medicines than other patients and the system overall," the report said.
While the pharmaceutical industry is often lambasted for placing high price tags on medications, which many consider one of the biggest hurdles to keeping patients from getting life-saving treatments, there have also been increasing calls for reform across the healthcare spectrum.
"After a year of heated discussion about the cost and affordability of drugs, the reality is that after adjusting for population and economic growth, total spending on all medicines increased just 1.1% annually over the past decade," said Murray Aitken, executive director of the QuintilesIMS Institute.
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