Overall drug spending grew just .6 percent in 2017: here's why
The greatest decline in treatment volumes in 2017 was for prescription opioids, which fell by more than 33 percent during the past two years.
Spending on drugs grew by 0.6 percent in 2017 after off-invoice discounts and rebates, according to IQVIA Institute’s report, “Medicine Use and Spending in the U.S.: A Review of 2017 and Outlook to 2022.”
This spending includes all types of drugs, including institutional use for inpatients and outpatients. Focusing only on retail and mail-order pharmacy distribution, net spending declined by 2.1 percent.
When adjusted for manufacturer discounts and rebates, as well as economic and population growth, medicine spending declined, on a per capita basis, by 2.2 percent in 2017 after increasing an average of 1 percent per year since 2008. The balance of spending has shifted strongly to specialty medicines from traditional treatments.
Related: Strategies to keep prescription drug spending in check
Medicine use by patients has continued to rise, according to the report. In 2017, there was a significant increase in chronic, 90-day prescriptions which can be linked to efforts to improve adherence. However, the greatest decline in treatment volumes in 2017 was for prescription opioids — the highest doses of prescription opioids declined by over 33 percent during the past two years.
Pharmacy prices for brand prescriptions increased by 58 percent over the past five years, while final out-of-pocket costs for all prescriptions declined by 17 percent.
New drug launches more than doubled in 2017 from 2016. Forty-two new active substances were launched, with 21 for rare diseases and 14 in cancer. Significant shifts in the regulatory process are becoming apparent, as 19 drugs received a breakthrough designation and 18 included patient-reported outcomes as part of their approved label from FDA.
The outlook to 2022 is for 2 percent to 5 percent net spending growth, with 1 percent to 4 percent growth in retail and mail-order prescription drugs. “This growth, driven primarily by the large number of new medicines, many of which will be specialty and orphan drugs, will be offset by the impact of losses of brand exclusivity,” the authors write.
The Pharmaceutical Care Management Association released a statement noting that the IQVIA Institute reports shows net prescription spending is decreasing in settings in which pharmacy benefit management tools are widely used.
Focusing only on retail and mail/specialty pharmacy distribution, net spending declined by 2.1 percent in 2017, according to the report. Spending increased in 2017 through channels not managed by PBMs. In retail and mail/specialty pharmacies, where PBM tools are used, the report shows net spending – including the combined impact of drug prices, generic vs. brand drug use, and the overall number of prescriptions – declined by 2.1 percent last year. However, in non-retail settings, like hospitals and clinics, spending grew by 5.9 percent and represented one-third of overall spending in 2017.
Manufacturer list prices on brand prescriptions increased 6.9 percent in 2017. However, factoring the impact of rebates and discounts negotiated by PBMs, statutory Medicaid rebates, and other factors, net brand drug price growth was 1.9 percent and is projected to remain in the 1 percent to 4 percent range over the next five years.
“Separate research shows PBMs reduce drug costs by 30 percent for more than 266 million Americans enrolled in private and public plans, most notably Medicare Part D,” the trade group writes. “In addition, PBMs are on track to reduce prescription drug coverage costs by $654 billion over the next decade for government and commercial payers.”