Pharmacy Journal Examines National Trends in Prescription Drug Spending

AJHP Projects 11 to 17 Percent Rise in Hospital & Clinic Drug Expenditures in 2016

Newswise, July 8, 2016— A sharp rise in prescription medication prices — driven by the introduction of new, expensive specialty medications and huge increases in the costs of older drug products with few competitors — drove an 11.7 percent increase in hospital and clinic spending on medications in 2015, according to a new report published in AJHP (American Journal of Health-System Pharmacy). AJHP is the peer-reviewed, scholarly publication of ASHP (American Society of Health-System Pharmacists). 

The article “National trends in prescription drug expenditures and projections for 2016,” commissioned by ASHP and written by Glen T. Schumock, Pharm.D., M.B.A., Ph.D., et al., provides an overview of the factors driving medication costs up, often far past the rate of inflation.

The report projects an 11 to 13 percent increase in total drug expenditures in hospitals and health systems in 2016, which includes a 15 to 17 percent increase in clinic spending and a 10 to 12 percent increase in hospital spending.

The report’s authors relied on information from the IMS Health National Sales Perspectives™ (NSP) database to examine past trends in drug expenditures and expected changes in the drug marketplace that may influence drug costs, including anticipated new drug approvals and patent expirations, to make their predictions. ASHP publishes this annual projection of drug expenditures to help health-system pharmacy leaders plan drug budgets.

Total U.S. prescription drug sales in 2015 were $419.4 billion, and prescription expenditures in clinics and nonfederal hospitals totaled $56.7 billion (a 15.9 percent increase) and $33.6 billion (a 10.7 percent increase), respectively.

“Because factors that influence spending vary by sector, it’s important to drill down to understand what is happening in each sector and drug class,” said Dr. Schumock, Professor and Head of the Department of Pharmacy Systems, Outcomes, and Policy at the College of Pharmacy at The University of Illinois, Chicago.

In nonfederal hospitals, rising prices of existing drugs (specifically injectables) drove the growth in spending. In clinics, increased volume of use led to higher expenditures. Infliximab was the top drug based on total spending in both settings.

“Individual drugs with the greatest increases in expenditures in 2015 were specialty agents and older generics; these agents are likely to continue to influence total spending in 2016,” according to the authors.

AJHP Editor in Chief Daniel J. Cobaugh, Pharm.D., DABAT, FAACT, believes that pharmacists will find the trends and projections outlined in the report to be invaluable in planning ahead to control potential drug cost increases while maintaining the quality of patient care.

“The drug expenditures forecast provides critically important and timely data that pharmacy leaders can use in their planning as they strive to provide high-quality patient care in a complex healthcare environment,” he said.

According to Dr. Schumock, pharmacists need to be diligent about understanding what factors influence drug spending within their own organizations.

 “By understanding the key cost drivers, pharmacy leaders can implement programs to target them,” he noted, adding that such strategies could include working with prescribers to use equally effective but less expensive medications or developing programs such as antibiotic stewardship to reduce unnecessary use of drugs.

Dr. Schumock believes that the continued expansion of the number and use of high-priced specialty medications will push costs even higher in 2016. “Specialty medications will constitute a significant portion of new medications on the market in the future,” he said. “As such, they will drive even higher spending.”

The authors note that in 2015, the U.S. Food and Drug Administration (FDA) approved 45 new medications for complex, chronic, or rare diseases such as metastatic breast cancer, plaque psoriasis, HCV infection, cystic fibrosis, and pulmonary arterial hypertension.

The authors also previewed other challenges that are on the horizon, including restricted distribution channels created by manufacturers for certain specialty medications.

An aging patient population, greater patient access to healthcare services due to the Affordable Care Act, and a growing U.S. economy will also influence medication costs in the future, according to Dr. Schumock. One of the bright spots on the horizon for reducing medication costs may be the advent of biosimilars.

“However, drug spending will be reduced only when there are a sufficient number of these products on the market to create competition and drive down prices,” he cautioned.

To glean further insight into future drug spending trends and projections, listen to an ASHP Voices interview with Dr. Schumock and the study’s co-author, Michelle D. Wiest, Pharm.D., BCPS, FASHP, by clicking here. In addition, click here for an infographic to help readers interpret the paper from a visual perspective.

EDITOR’S NOTE: The 2015 Prescription Drug Expenditures infographic can be made available for digital and print reproduction.