2014 drug costs soar, no end in sight

While hepatitis C drugs Sovaldi, Harvoni, and Viekira Pak have been in the news recently because of their high price tag, and Express Scripts’ and CVS Health’s exclusive agreements with the drugmakers, they are not the only culprits in soaring drug costs.

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Older medications are also to blame. In fact, brand-name drug prices spiked 14 percent in the 12 months through the end of the third quarter of 2014, adding $32 billion to drug spending, Elliot Wilbur, a Needham & Co. analyst, recently told NASDAQ.com. Generic drug prices also increased in 2014.

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The IMS Institute for Healthcare Informatics also found that global medicine spending growth peaked in 2014, driven predominately by the US market, which it forecast to soar between 11% and 13% for the year.

And a 2014 study published in the Journal of American Health System Pharmacists projected that medication spending would jump between 5% and 7% in 2014, including between and 1% and 3% for the hospital setting.

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“These estimates are based on recent prescription expenditure trends, anticipated and recent new drug approvals, and recent and anticipated patent expirations…as well as our overall assessment of the impact of anticipated changes in the industry,” the authors wrote.

However, payers may eventually gain more leverage over medicine costs, according to NASDAQ.com. Major players such as Amerisource Bergen Corp., Walgreen and Alliance Boots GmbH are using their combined buying power to push for lower prices.

Others are doubtful that drug pricing will get better anytime soon. "If anything, 2015 list prices will grow more quickly than in 2014," Richard Evans, a former drug-industry pricing official who is now an analyst at SSR Health LLC, told NASDAQ.com.

And the IMS Institute for Healthcare Informatics found that global spending on pharmaceuticals will increase by $305 to $335 billion through 2018, compared to $219 billion during 2007 to 2012.