Prescription drug spending, prices moderate in Q2
- Retail spending on prescription drugs grew by 3.4% in the second quarter, down from 3.7% in the first quarter and 4.7% for 2017, finds a new study based on data from the Census Bureau.
- Overall healthcare costs increased by 5% year over year in the past quarter, outpacing the 4.6% increase seen in the first quarter and the 4.8% increase seen across first half of the year, according to the Altarum Center for Value in Health Care’s second-quarter Health Sector Trend Report.
- Prescription spending growth rates may be revised down for 2017 after the Centers for Medicare and Medicaid Services adjusts for prescription drug rebates, Altarum researchers said.
Multi-thousand-dollar price tags for specialty drugs like Gilead Sciences' Sovaldi (sofosbuvir) contributed to a spike in prescription drug spending of 12.4% in 2014. The hepatitis C treatment's infamous $84,000 list price, along with dramatic hikes in other off-patent drugs, helped to put a national spotlight on drug prices.
Prescription spending growth has dropped since then to a 10-year low 1.3% in 2016 before rebounding to 4.7% in 2017. Average prices have been more stable, suggesting that increased use has fueled a big part of the spending.
Drugmakers often note correctly that healthcare services account for a bigger slice of overall health spending. About 9.8% of national health spending comes from prescription drugs, the report noted, while about 70% comes from services — a broad category that includes hospital, physician and clinical costs.
Healthcare services spending increased 4.9% in the second quarter, which was more than the 4.2% observed in the first quarter. Spending growth in the second quarter exceeded any quarter over the past two years, though the spike wasn't particularly significant.
The report found healthcare price growth to be under control, especially for public payers. Another recent Altarum brief said private payer spending has grown because of higher price growth and utilization compared to Medicare and Medicaid.
Medicare spending has remained in the 4% to 4.5% range, while private payer has exceeded Medicare's spending since 2011. Medicaid spending saw huge growth gains with Medicaid expansion taking effect in 2014 and 2015. However, that cost growth nosedived in 2016, partly because of states moving to managed care Medicaid.