- Annual drug spending in the U.S. hit $310 billion last year, increasing 8.5% from 2014 levels on a net basis, according to a new report from the IMS Institute for Healthcare Informatics. Spending grew more slowly than it did in 2014 and was driven by the entry of new brands and higher spending on generic medicines.
- Despite higher overall spending, net prices on branded drugs increased by 2.8% in 2015, noticeably lower than the 5.1% growth in 2014. IMS attributed this to greater competition between manufacturers, as well as efforts by benefits managers and health plans to lower costs.
- So-called specialty drugs made up an even greater share of total spending, boosted by new cancer treatments such as PD-1 inhibitors.
Although spending growth slowed from 2014, it remained at "historically high" levels, according to the report. IMS tracked spending on both an invoice price basis, reflecting the amount paid to distributors by pharmacies or hospitals, and on a net price basis, which estimates the impact of rebates and discounts on the price of drugs.
While price growth for branded prescription drugs grew by 12.4% on an invoice price basis, net price growth checked in at only 2.8%—a smaller increase than in the past several years. Data like this could be an indication of growing leverage on the side of PBMs and health plans as they work to lower costs and extract greater discounts from drug manufacturers.
"This reflects the heightened competition among manufacturers and more aggressive efforts by health plans and pharmacy benefit managers to limit price growth," the report said.
More than half of the overall growth in spending last year came from new brands which have been on the market for less than 2 years. New hepatitis C drugs, like Gilead's Sovaldi and Harvoni, were a major contributor to this segment. But the impact of these drugs on spending growth may be waning as patients on the treatments experience high cure levels.
According to the report, "patient new therapy starts peaked in March 2015 and have started to slow as the majority of patients most in need have sought and received treatment."
IMS sees a US drug market which will continue to grow steadily over the next five years, with total spending reaching $370 to $400 billion by 2020 on a net basis. This would be annual growth of around 4% to 7%.
And the drug pricing debate looks unlikely to wane either, with IMS predicting price growth continuing to grow at "historic levels through 2020," albeit at a lower than than the 2013-2015 period.