Medication spending drops 3.5 percent

Spending on U.S. medicines fell 3.5 percent on a real per capita basis in 2012, driven in large part by greater availability of generics and lower price increases. In addition, the use of healthcare services overall declined for the second consecutive year, according to a recently released study by the IMS Institute for Healthcare Informatics.

Total spending on medications reached $325.8 billion in 2012, or real per capita spending of $898, which was down $33 from 2011, said a news release announcing the report, “Declining Medicine Use and Costs: For Better or Worse?” Spending was down 1 percent nominally before adjusting for population, the report noted.

Patent expirations in 2012 contributed $28.9 billion to the reduction in medicine spending. This was their largest-ever impact as millions of patients accessed lower-cost generic versions of additional medicines, the release said. Generics now account for 84 percent of all prescriptions.

Underlying drivers for the overall decline in healthcare service use included fewer patient visits to office-based physicians, fewer non-emergency admissions to hospitals and outpatient facilities, and a less severe flu season in the early part of 2012, the release said.

The decline in spending comes as major components of the Affordable Care Act take effect in 2014.

Patients with insurance also paid higher deductibles, co-pays and co-insurance for their overall healthcare, but prescription drug co-pays for most patients declined, the release said.

“The cost curve for medicines was clearly bent in 2012, for better or for worse,” said Murray Aitken, executive director, IMS Institute for Healthcare Informatics, in the announcement. “To some extent, this is a harbinger of more efficient use of our healthcare resources, but it also reflects a decline in utilization that may be the result of under-treatment and an imbalance between prevention and care.”

Overall healthcare spending is growing more rapidly than spending on medicines and is expected to continue to do so, at least through 2017, the report said.

New transformative medicines also became available last year to treat a large number of diseases with small or strictly defined patient populations, the release said. These included new treatments for some rare diseases, rheumatoid arthritis and cancer.

Patent expirations provided savings in a number of therapy areas, while new medicines drove spending in more specialty therapy areas, the report said. The top five classes in 2012, based on spending, were oncologics ($25.9 billion), mental health ($23.5 billion), respiratory agents ($22.1 billion), antidiabetics ($22 billion) and pain ($18.2 billion).

Spending growth gains were highest for antivirals (excluding HIV), multiple sclerosis, ADHD, HIV antivirals and autoimmune diseases. Antivirals excluding HIV, the therapy area that includes flu vaccines and newer treatments for hepatitis C virus, grew by more than 20 percent, driven by breakthrough therapy drug telaprevir (Incivek).

IMS analyses for the report are based on its information resources on prescription-bound products, including insulins that are available without a prescription. Spending figures come from its sales resources reported at wholesaler invoice prices and do not reflect off-invoice discounts and rebates.