A recent IMS Health report shows that prescription drug spending in the U.S. rose 8.5 percent last year, marking three straight years of increases of nearly 10 percent. Analysts believe that very expensive drugs and price hikes on the rest of medicines may be behind the rise.
According to the report, the U.S. spent 309.5 billion dollars on prescription drugs alone in 2015. The group estimates that annual drug spending should be no larger than 7 percent through the end of the decade. By 2020, drug spending could hit $370 billion to $400 billion, IMS Health experts said.
The figures are based on prices that include discounts and rebates. In past reports, IMS did not include discounts in its estimates. The report is consistent with criticism on unaffordable medicines coming from insurers, physicians, and the general public. Congressmen and presidential candidates have pledged to curb drug prices, requesting larger discounts from manufacturers of medicines that have no alternatives on the market.
Analysts think that drug prices will continue to climb as there is less competition from generic drug makers for ultra-expensive drugs. Random price hikes and a jump in prescriptions filled could also be major contributors to the situation. In 2015, the number of prescription jumped 10 percent to about 4.4 billion. In previous years, prescriptions only rose 2 percent per year.
Murray Aitken of IMS Health believes that there is another reason for the rise in drug spending. Currently, more people are insured, so they have easier access to brand name drugs.
Due to Obamacare, 20 million Americans are newly insured. Yet, these people are often given generic drugs which are less expensive. The most expensive medications include drugs to treat HIV/AIDS, cancers, hepatitis C, and rare disease. Therapy involving these drugs can cost more than $100,000 per year.
In the meantime, pharma companies keep raising the prices of their popular brand-name drugs. Some companies resorted to rises of 20 percent per year. But the most popular price hike was the 5,000 percent overnight rise for Daraprim a potentially life-saving drug for HIV patients.
The report also shows that drug spending climbed $24.3 billion in 2015 of which half of the sum was allocated to products that were less than two years on the market. Last year, 43 new drugs received FDA approval. What’s more, analysts expect spending on new drugs to jump even more in the next years as clinicians become more acquainted with them.
Image Source: Flickr