Between 2005 and 2013, the United States prescription drug market grew at an average annual pace of 1.8%. The same market experienced a dramatic growth rate in 2014 of 11.5%.
Between 2005 and 2013, the United States prescription drug market grew at an average annual pace of 1.8%. The same market experienced a dramatic growth rate in 2014 of 11.5%. A new study, published in Health Affairs, sought out to understand if this dramatic increase was a one-time event or a permanent sign of future spending trends.
Murray Aitken, the executive director of the IMS Institute for Healthcare Informatics, in Parsippany, New Jersey, and colleagues found that forecasts suggest a moderation in prescription drug spending growth after 2014. The spending growth will average at 6.7% from 2016 through 2025.
“The recent acceleration in FDA approvals of new drugs, innovative and increasingly patient-friendly formulations, and regulatory initiatives may all be contributing to new treatment options, improved outcomes, and faster drug spending growth,” the authors wrote. “However, consolidation on the demand side by pharmacy benefit managers, insurers’ shift to increased patient copayments, and highly visible drug price increases by some manufacturers suggest that drug spending growth will likely be highly publicized and controversial.”
Study Design and Results
The authors analyzed US prescription drug spending trends using data from IMS Health’s National Sales Perspectives (NSP). Both price and quantity components for brand-name and generic medications were considered.
The observed spending patterns included:
Spending will Increase, but in Moderation
Based on the study of manufacturers’ rebates and discounts on prices, the researchers identified the 3 key factors that will most likely influence prescription spending over the next decade:
The pharmaceutical market landscape is evolving dramatically. However, the sudden growth that was seen in 2014 was a one-time phenomenon. Over the long term, based on the forecasts for 2016 through 2025, the retail prescription drug spending is expected to average at 6.7%.