Healthcare Issues and Trends

San Diego—For the first time in 60 years, prescription drug sales declined in the United States in 2012, falling by 1%. At the same time, the number of prescriptions filled increased only 1.2% last year, according to data from IMS Health, a healthcare analytics company.

Douglas Long, MBA, vice president of industry relations at IMS Health, discussed the reasons behind the trend and shared other industry insights during a Contemporary Issues session at the AMCP meeting titled Emerging Issues and Trends in Healthcare and Managed Care Pharmacy.

The United States remains the world’s largest pharmaceuticals market, accounting for nearly 50% of prescription drug sales. Nearly one third of the sales are in the top 5 therapeutic areas: (1) oncology drugs, (2) respiratory agents, (3) diabetes medications, (4) lipid regulators, and (5) antipsychotics.

However, as in other developed countries, the United States has been experiencing declining or small increases in drug spending. Mr. Long noted that drug spending accounts for approximately 10% of healthcare spending. There are a few explanations, he said, including an innovation drought in recent years, increased cost sharing, the introduction of new generic drugs, product safety concerns, and struggling economic conditions making people less likely to fill and pay for prescriptions.

Still, the costs remain high. Whereas IMS Health expects the sales of branded molecules  to grow an average of 0.5% to 1.1% per year from 2010 to 2015, biologics are predicted to increase at an annual rate of 4.5% to 5.0% during that same time period.

Mr. Long said there are several ways to control drug costs, including cutting prices, making formulary changes, and using generics. He added that the most effective method is reducing the cost per treatment per day.

In October 2012, the IMS Institute for Healthcare Informatics released a report titled Advancing the Responsible Use of Medicines outlining recommendations that policymakers, payers, providers, and patients could implement to save $500 billion annually in global health spending. The report mentioned the industry could improve on adherence to medications, untimely medicine usage, antibiotics usage, medication errors, generics usage, and managing polypharmacy.

The continuing shift towards generics will help keep costs down. In 2012, generics accounted for 80.7% of prescriptions, up from 67.9% in 2008. By 2017, generics will account for 87% of the drug market, according to IMS Health data, but the company expects the percentage to then slightly decrease but remain at or above 80%. As of December 2012, most generic drugs were in oral formulations.

In addition to the slowing growth in drug costs, 2012 featured other noteworthy events in healthcare, according to Mr. Long. Drug shortages continued, particularly for injectable medications and multisourced generics, albeit fewer than in 2011; DEA enforcement of misuse and abuse escalated; the Supreme Court ruled the Patient Protection and Affordable Care Act (ACA) was constitutional; the FDA approved 39 new molecular entities, the most in 16 years; and several large companies merged in the pharmacy benefit management industry, including Express Scripts with Medco and SXC Health Solutions with Catalyst Health Solutions.

Mr. Long predicts the healthcare industry will look much different in 2020 than it does now. By then, he said an additional 40 million people will have obtained health insurance, the health delivery system will have changed, Medicaid spending will have expanded by $500 billion, and there will be an additional $2.1 trillion in health spending.

From now until 2016, Mr. Long said health insurance reforms will have a positive impact on growth, particularly in the retail and primary care sectors. He also predicts the number of drug approvals will continue to increase. Of the 39 drugs approved in 2012, 10 were for cancer and 9 were indicated for orphan diseases. He also mentioned several branded drugs will lose their patents in the next 2 to 3 years, while payers will encourage people to use lower cost medicines.

Still, plenty of questions remain, according to Mr. Long. It is uncertain how the ACA provisions expected to be implemented in the next few years will affect reimbursement and regulations. Also, the unknown share of spending on generics, orphan drugs, and specialty drugs will have a major role in determining the trajectory of healthcare spending.