Top 7 new facts about drug spending

As organizations and politicians continue to sound the alarm that drug prices are rising, another new report confirmed the trend. Total spending on medicines in the United States reached $310 billion in 2015 on an estimated net price basis, up 8.5% from the previous year, according to a new report from the IMS Institute for Healthcare Informatics.

 “The level of price concessions achieved in 2015 points to a shift in market dynamics as manufacturers accept lower price increases on existing products. At the same time, spending on new brands continued at near-historic levels,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics.

Related: Brand and specialty drug spending spikes

Here are the top 7 facts to know about US drug spending:

1. Total spending on an invoice price basis-without adjusting for the impact of estimated rebates and other price concessions-reached $425 billion in 2015, up 12.2 percent over 2014 levels. Invoice prices for branded medicines rose 12.4% in 2015, compared with 14.3% in the prior year.

2. The increase in 2015 spending of $24.3 billion on a net basis and $46.2 billion on an invoice basis was fueled by new brands and protected brand price increases, offset by the impact of patent expiries. The greater use of generics and a small increase in demand for branded drugs contributed to the spending growth.

3. Heightened competition among manufacturers, along with more aggressive efforts by health plans and pharmacy benefit managers to limit price growth, resulted in concessions that reduced price increases on an estimated net basis to 2.8%, significantly lower than in prior years.

4. Spending on specialty medicines has nearly doubled in the past five years, contributing more than two-thirds of overall medicine spending growth between 2010 and 2015. Increased specialty spending was driven primarily by treatments for hepatitis, autoimmune diseases and oncology, which accounted for $19.3 billion in incremental spending.

Related: Hepatitis C therapies, compounded meds drive increase in US drug spending

5. The average patient cost exposure for brand prescriptions filled through a commercial plan has increased more than 25% since 2010, reaching $44 per prescription last year. The increased prevalence of health plans with pharmacy deductibles, copayments and coinsurance is contributing to the rise. In response, brand manufacturers are steadily increasing their use of mechanisms like coupons or vouchers to help patients offset the expenses.

6. Total prescriptions dispensed in 2015 reached 4.4 billion, up 1% year over year. Demand was higher in some therapy areas, such as antidepressants and anti-diabetes, each of which increased about 10% in 2015. Among those therapy areas that declined, narcotic drugs saw a 16.6% drop in the number of prescriptions dispensed.

7. US spending on medicines on a net price basis is expected to reach $370 to $400 billion in 2020, growing at a compound annual growth rate of 4% to 7%. This growth will reflect increased spending on innovative medicines, offset by lower spending on brands that will lose market exclusivity over the next 5 years. While brand price increases are expected to continue in the 10% to 12% range on an invoice basis, they will be significantly offset by rebates, discounts and other forms of price concessions. 

Read more: Americans want drug pricing reform