by Clive Riddle, April 17, 2014
Course corrections on mammoth shipping lines don’t happen in an instant – you watch them develop over a period of time. The same can be said for pharmaceutical costs as well as the entire healthcare sector, and the IMS Institute for Healthcare Informatics tells us we’re witnessing a slow correction right now.
Costs that have been stabilized this decade are gradually starting to tick upwards. The IMS Institute has just released a study: Medicine Use and Shifting Costs of Healthcare: A Review of the Use of Medicines in the United States in 2013 which found that “total dollars spent on medications in the U.S. reached $329.2 billion last year, up 3.2 percent on a nominal basis and a rebound from the 1.0 percent decline in 2012… Total spending on U.S. medicines increased 1.0 percent on a real per capita basis in 2013, while the use of healthcare services overall rose for the first time in three years.”
This doesn’t mean that costs are about to go crazy in an upward spiral just yet – remember that this is a big ship. Instead, Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, tell us “following several years of decline, 2013 was striking for the increased use by patients of all parts of the U.S. healthcare system – even in advance of full implementation of the Affordable Care Act. Growth in medicine spending remains at historically low levels despite a significant uptick last year, and continues to contribute to the bending of the healthcare cost curve.”
So what is driving this gradual correction? The IMS Institute identifies these factors:
- The reduced impact of patent expiries (“Patent expiries in 2013 contributed $19 billion to lower medicine spending, compared with $29 billion the previous year.”)
- Price increases for branded products added $4 billion more in spending growth last year compared to 2012
- Higher spending on innovative new medicines (“while 36 New Molecular Entities launched in 2013, the largest number in a decade”)
- Greater use by patients of the healthcare system (“Overall utilization of healthcare services grew slightly as consumers returned to the healthcare system – primarily through more office visits to specialist physicians as well as outpatient treatments – following several years of self-rationing. “)
The IMS Institute shared these other key findings from their report:
- The number of patient office visits to primary care physicians fell by 0.7 percent in 2013.
- Visits to specialists increased by 4.9 percent overall and by 9.5 percent for seniors.
- Patients filled an average of more than 12 retail prescriptions last year, up nearly 2 percent year over year.
- Those aged 65 and over filled an average of 28 prescriptions annually, down slightly from 2012.
- Overall spending on medicines remained concentrated in traditional small-molecule pills dispensed through retail pharmacies.
- But higher spending growth was seen in biologics and specialty drugs – particularly in retail and mail-order settings.
- A total of 27 new oncology drugs have launched in the past three years.
- Additionally, clusters of innovation are transforming patient care in hepatitis C, multiple sclerosis and diabetes, as well as stroke and acute coronary syndrome.
- Seventeen orphan drugs – developed for patient populations of fewer than 200,000 individuals – launched in 2013, the most in any year since the passage of the Orphan Drug Act in 1983.
- Patients with insurance are incurring higher out-of-pocket costs for healthcare services despite lower co-pays for many prescriptions and additional discounts for preventive medicines.
- Prescription drug costs paid by most patients are declining, with average out-of-pocket costs falling below $5 for 57 percent of all retail prescriptions filled.
- At the same time, 30 percent of total patient out-of-pocket costs relate to just 2.3 percent of prescriptions, often high-cost specialty medicines.
- Twenty-three percent of prescriptions now carry no out-of-pocket costs, a dramatic rise in 2013 driven by common preventive medicines that include oral contraceptives.
Want to get more detail? The report can be downloaded as an app via iTunes.