U.S. Spending on Drugs Increases

The growth rate of drugs slows but remains high, fueled by the new, pricey medications.

Total spending for prescription medications across the U.S. was 12.2% higher to over $425 billion for 2015, which continued the steep climb that has been driven by an introduction the past few years of new, expensive drugs for infections and cancer, along with hikes in prices for the older drugs.

The growth rate in spending decelerated from the rate in 2014 of 14.2% partly due to expirations of patents on certain drugs. However, the growth remains far above the average over the last decade.

The figures used are based upon the list prices by pharmaceuticals.

Healthcare payers, patients, doctors and politicians have criticized more and more the pricing of drugs over the last year, saying that medicines are far out of reach of many patients and straining the budgets in healthcare.

Drug makers have been defending their practices of pricing, in part through pointing out healthcare bill payers are offered rebates and other forms of discounts from the list prices of the drugs, though they maintain confidential the specific size of the concessions.

An industry lobbying organization said via a prepared statement that the report confirms that costs of drugs are moderating because of the competitive marketplace for the medicines where large and powerful purchasers are negotiating aggressively and the generic utilization rates are close to 90%.

For only the first time, the report broke out the price concessions’ effects. The group estimated that following rebates and other breaks in pricing, manufacturers received over $30.5 billion for prescription drugs in the U.S. during 2015, which was up by 8.5% from the previous year.

The higher figure for total spending was $425 billion, but is based upon list prices that pharmacies as well as hospital customers pay wholesale distributors of drugs

While the list price average for brands protected by patents rise last year 12.4%, the growth in net price after the discounts was just 2.8%. During 2014, the average list price hike for patented brands was more than 14.3% versus a growth of 5.1% in net price.

 

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