Pricing furor aside, drug spending growth slowed last year — but still hit $323B

The figures are courtesy of the QuintilesIMS Institute, which released its annual drug spending report in May. All told, net U.S. drug expenses reached $323 billion last year, while invoice-level spending was $450 billion.  Taken together, the figures represent an industrywide rebate and discounting level of 28%. Spending growth also slowed on an invoice basis in 2016, to 5.8%, from about 12.5% in 2015 and about 15% in 2014.  Importantly, the numbers represent overall growth, and drug spending in the U.S. continued to expand in 2016.  Last year’s net spending increase followed an 8.9% jump in 2015, and an even higher leap of about 10% for 2014.

Other big industry trends, according to QuintilesIMS, include a continued shift to specialty medicine spending, a deceleration of invoice price hikes, and a downturn in new drug sales.  On specialty meds, the experts noted that the class now accounts for $384 of the $895 per person per year spent on pharmaceuticals in the U.S.

For invoice price hikes in recent history, QuintilesIMS’ report notes a high point back in 2014, when average invoice price increases were 13.7% for the year.  That number fell to 12% in 2015 and 9.2% last year as the industry continued to grapple with broad pricing pressures.  Average price increases after discounts were even lower at 4.5% for 2014, 2.5% for 2015 and 3.5% for last year.

New drugs, those on the market for less than 24 months, generated $13.9 billion in sales last year which is a downturn from $17.3 billion in 2015 and $20.6 billion in 2014.  As the analysts note, the FDA approved fewer than half the number of new meds last year as it did in 2014 and 2015.  So far this year, however, that trend seems to be reversing.  The FDA approved more new meds during the first quarter of 2017 than during the same period of any year in recent history.  The Agency didn’t stop there, and has since brought its total new drug approval tally to 19 for this year.

Looking ahead, QuintilesIMS experts are not expecting huge price increases in the coming years.  Report authors write that “drug manufacturer responses to heightened market competition and scrutiny of drug pricing are expected to result in more modest levels of invoice (and net) price growth in the forecast period.”

QuintilesIMS releases its industry analysis as politicians in Washington work to take on drug costs through a variety of proposals, including drug importation and Medicare price negotiation.  Their efforts are boosted by broad public support, with a Kaiser Family Foundation poll in May finding that 60% of Americans consider the issue a “top priority” for President Donald Trump and Congress.

REFERENCE:  Fierce Pharma; 04 MAY 2017; Eric Sagonowsky

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