Total spending on medicines declined by 3.5 percent, according to the IMS Institute for Healthcare Informatics report, Declining Medicine Use and Costs: For Better or Worse?” report. In addition, nominal pharmaceutical spending reached $325 billion in 2012, or real per capita spending of $898, a decline of one percent.
The growing use of generic medications and brand patent expirations are major reasons that US spending on drugs declined in 2012, according to a new report.
Total spending on medicines declined by 3.5%, according to the IMS Institute for Healthcare Informatics report, Declining Medicine Use and Costs: For Better or Worse?”. In addition, nominal pharmaceutical spending reached $325 billion in 2012, or real per capita spending of $898, a decline of 1%.
“IMS has been tracking overall sales in the United States for nearly 60 years, and we have never seen a medicine spend decline,” said Michael Kleinrock, director of research development at IMS, during a media conference call.
While the decline in spending indicates more efficient use of healthcare resources, it also reflects a decline in utilization which “may be the result of under-treatment and an imbalance between prevention and care,” said Murray Aitken, executive director of IMS, in a press statement.
Medicine spending dropped for a few different reasons, including effects of major brand drugs’ patent expirations, including Lipitor and Plavix, in 2011.
At the same time, spending on generic medications increased by $8 billion and generics now accounts for 84% of all prescriptions. “Generics capture most of the volume of usage of a molecule following patent expiry and, as a result, they reduce drug costs substantially,” Kleinrock said.
Other factors impacting the overall medicine spend decline include: a decrease of 0.9% in patient visits to physicians’ offices, a slight decline in outpatient treatments, a drop of 0.5% in elective surgeries at hospitals, and a less severe flu season in the early part of 2012, according to IMS.
At the same time, Kleinrock said IMS is concerned over the spike in emergency room visits and admissions, which increased 5.8% in 2012. “The visits are driven by the insured, not the uninsured. They could have visited an urgent care clinic or a doctor’s office,” Kleinrock said.
Patients may be cutting back on physician visits because those with insurance paid higher deductibles, copays and co-insurance in 2012, according to the report. The average out-of-pocket costs for commercially insured patients less than aged 65 years reached $1,146 in 2012, a 30% jump from 2011. The spike is “entirely the result of higher deductibles,” according to IMS.
“Consumer-driven health plans, including health savings accounts, are clearly having an impact on patients’ decision-making. Some small to mid-size employers are only offering these types of plans [instead of PPO and HMO plans],” Kleinrock said.
While patients paid higher overall copays, prescription drug co-pays declined by $2 to $121 in 2012. Patients filled 72% of all prescriptions with a copay of $10 or less. “Lower copays tend to have a dramatic impact on the ability and willingness to afford that medication,” Kleinrock said.
The top 5 therapy areas for spending on medications in 2012 were: oncologics ($25.9 billion), mental health ($23.5 billion), respiratory agents ($22.0 billion, antidiabetics ($22.1 billion), and pain ($18.2 billion). The oncologic class took the lead from mental health medications, which was the top spending category in 2011.
Absolute spending growth gains were highest for antivirals (excluding HIV), multiple sclerosis, ADHD, HIV antivirals, and autoimmune diseases. “Antivirals…the therapy area that includes flu vaccines and newer treatments for hepatitis C virus, grew by more than 20%, driven by the breakthrough therapy teleprevir,” according to the IMS report.
However, a rise in novel disease treatments last year may lower future healthcare costs. “The new medicines in 2012 represent an amazing group of breakthroughs, including nine new cancer drugs. That is the most new cancer drugs in over a decade,” Kleinrock said. In total, 28 new molecular entities launched in 2012. Seven orphan drugs, including novel treatments for cystic fibrosis, chronic myeloid leukemia, and multiple myeloma also became available.
This article originally appeared in Managed Healthcare Executive, June 2013.