Drug Spending in US Increased 4.5%

Spending on all U.S. medicines increased 4.5% to $344 billion on a net price basis, despite lower price growth, due to higher patient use of new and protected brands, according to IQVIA Institute’s “Medicine Use and Spending in the U.S.: A Review of 2018 and Outlook to 2023″ report.

Prescription opioid dosage volume — as defined by morphine milligram equivalents, or MMEs — declined 17% in 2018, marking the single-largest annual drop ever recorded within the U.S. market, the report said.

In 2018, 29 billion fewer MMEs were dispensed to patients on a volume basis compared to 2017. The steepest decline occurred in the “high-strength” formulations of 90 or more MMEs per day, which declined by 61% since 2011.

Decline drivers include shifts in clinical usage, new regulatory and reimbursement policies and legislation tightening restrictions on prescription opioid use since 2012. Overall medicine spending is expected to increase 3-6% on net basis to $420 billion by 2023.

The study shows that prescription opioid volume had increased annually since 1992, reaching its highest level in 2011. A series of regulatory and legislative restrictions subsequently occurred. Those combined with tighter clinical prescribing guidelines and greater reimbursement controls resulted in 4%-per-year declines on average from 2012 through 2016, followed by a 12% drop in 2017 and the historic 17% decline last year, according to the report.

Despite those national trends, state-level variability was wide regarding per capita volume of opioid and medication-assisted treatment, or MAT prescriptions. Specifically, Arkansas, Oklahoma and Kansas had the highest number of opioid prescriptions relative to MAT prescriptions, while all New England states showed fewer than average opioid prescriptions and higher MAT use.

Prescription drug monitoring programs now in place in 49 states significantly limit prescribing of high-dose opioids, which are associated with a higher risk of dependency and overdose and saw the steepest decline in 2018.

“As the national discussion regarding the opioid epidemic in this country continues, we hope to inform and advance that dialogue with some of the important findings in this report,”

Murray Aitken, IQVIA senior vice president and executive director of the IQVIA Institute for Human Data Science, said.

Aitken added,

“For instance, while prescription opioid usage continues to decline, we saw many more people receiving medication-assisted treatment for opioid addiction. Our research shows new therapy starts for MATs increased to 1.2 million people in 2018, nearly a 300% increase compared with those seeking addiction help in 2014. This is an important indicator of the effects of increased funding and support for treatment programs to address addiction.”

Additional highlights of the 2019 U.S. Medicines Report include:

• Medicine use trends: There were 5.8 billion prescriptions dispensed in 2018, up 2.7% from 2017 when adjusted for prescription duration. More than two-thirds of total prescriptions last year were for chronic conditions, which are increasingly filled with 90-day prescriptions. The largest increase in medicine use in 2018 was seen in anti-hypertensives, with an increase of 48 million prescriptions filled last year, and mostly driven by an aging population and expanded guidelines to lower blood pressure. Increased focus on patient adherence, including incentives in Medicare Part D, is resulting in greater use of 90-day prescriptions and higher adherence rates among patients with common chronic conditions.
• Medicine spending and growth: In 2018, spending grew 4.5% among off-invoice discounts and rebates, while growth at the invoice level was 5.7%. Discounts, rebates and other price concessions on brands reduced absolute invoice spending by an estimated 28% to $344 billion. Spending grew in 2018 due in part to the launch of new branded products as well as an increase in the volume of current branded products. Net price growth was 0.3% in 2018, or 1.6% below the Consumer Price Index, while price increases for protected brands moderated to 5.5% on an invoice-price basis.
• Patient out-of-pocket costs:  Total patient out-of-pocket costs for retail prescription drugs were estimated to be $61 billion in 2018, marking a $2 billion increase compared with 2017 and up $5 billion from 2014. Medicare patients faced higher annual out-of-pocket cost levels than patients in commercial plans or on Medicaid. Almost 20% of Medicare Part D patients had out-of-pocket costs higher than $500 annually while only 8.8% of the broader population had similar out-of-pocket expenses. Commercially insured patients increasingly used manufacturer coupons to offset initial cost exposure and average final out-of-pocket costs remained at $42 per brand prescription, similar to 2017 levels.
• Outlook to 2023: While the full impact of potential policy changes on manufacturer net sales is unclear, total net spending growth on pharmaceuticals is forecast to increase at a compound annual growth rate of 3-6% on net price basis, and 4-7% on invoice price basis through 2023. The baseline scenario for the next five years forecasts net medicine spending in the United States will increase from $344 billion in 2018 to $420 billion in 2023, an aggregate growth of $76 billion compared to aggregate net growth of $84 billion over the past five years. The largest driver of this growth will be the launch of new brands, which are forecast to contribute $73 billion of new spending as clinical development efforts across the pharmaceutical industry result in new drug approvals and uptake.

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