IMS Health: Prescription Drug Spending Increased in the United States Last Year

In 2013 Americans spent $329.2 billion on prescription drugs, which was a 3.2% increase from the year before. The IMS Institute for Healthcare Informatics released their study today, also documenting the rise in spending for healthcare overall.

The reason believed to have caused the spike in money spent on prescription drugs is that 36 new treatments entered the market last year, including ten drugs for cancer and others for hepatitis C, multiple sclerosis, stroke, acute coronary syndrome, and diabetes. These diseases require extensive treatment that is hard to come by.

When a new drug enters the market, especially for the diseases like the ones previously mentioned, it is often very costly. For example, Gilead Sciences' new hepatitis C drug Sovaldi was approved by the FDA on December 6. The company is setting the cost for the drug at $1,000 per pill and $84,000 for a 12-week treatment plan. Additionally, cancer treatments can cost hundreds of thousands of dollars and newer ones are likely to attract sales.

Another factor was a reduced impact of patent expirations, which only contributed to $19 billion in less spending for 2013 compared with $29 billion in 2012. Branded products witnessed price increases, contributing to $4 billion more in spending for medicine. Although traditional prescription drugs dispensed from pharmacies remained steady, the prices rose for some of these medicines while patient visits to specialists increased by almost 5%.

"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," said Murray Aitkin, the executive director of the IMS Institute for Healthcare Informatics, in this IMS news release.

2013 was most likely an aberration for this spending increase because the 36 New Molecular Entities (NMEs) - new treatments - were the most released in any year over the past decade. Two other unlikely high increases also contributed to the 3.2% growth: there was an increase of 13 million outpatients visits to hospitals and prescriptions for contraceptions increased 4.6%.

You can read the full report on the IMS website and see for yourself which aspects may have had the biggest effect on the spending boom.