Trends in US Pharmaceuticals

San Antonio—For the first time in at least 60 years, prescription drug sales declined in 2012, falling 0.8% as several blockbuster drugs lost their patents, more people chose to use generics, and weak economic conditions led to a wider adoption of cheaper generics or skipping medications altogether. The trend continued for the first 8 months of 2013, according to IMS Health data, as sales fell by 1.1%.

From August 2012 through August 2013, sales of prescription drugs fell 1.7%. There was a 4.4% decrease in brand sales but an 8.1% increase in generic sales. However, spending on healthcare in general and in prescription drugs in particular is still high and a burden on the economy, according to Douglas Long, vice president of industry relations at IMS Health. He spoke at the AMCP meeting during a session titled Emerging Issues and Trends in the U.S. Pharmaceuticals Market.

In 2011, the United States spent $2.7 trillion on healthcare, including 31% on hospital care, 20% on physicians and clinics, and 10% on prescription drugs. That year, Medicaid accounted for 11% of the federal budget and 24% of state budgets. The spending is continuing to grow, too.

“There is going to be a cost containment battle for the next 50 years,” Mr. Long said.

From August 2012 through August 2013, the top sales categories were:

• Lipid regulators ($12.5 billion; decrease of 30.9% from a year earlier)

• Analogs of human insulin ($12.4 billion; increase of 22.8%)

• Antipsychotics ($11.9 billion; decrease of 24.9%)

• Anti-arthritis biologic response modifiers ($11.3 billion; increase of 19.7%)

• Proton pump inhibitors ($9.6 billion; increase of 1.3%)

During that same time period, the top categories by dispensed prescriptions were:

• Antidepressants (274 million prescriptions)

• Lipid regulators (248 million prescriptions)

• Codeine and combination products (204 million prescriptions)

• Angiotensin-converting-enzyme inhibitors (163 million prescriptions)

• Seizure disorders (132 million prescriptions)

In addition, the top drugs during that time period were:

• Aripiprazole at $6.3 billion

• Esomeprazole magnesium at $6.0 billion

• Duloxetine delayed-release at $5.3 billion

• Rosuvastatin calcium at $5.3 billion

• Adalimumab at $5.2 billion

• Fluticasone propionate at $5.1 billion

• Etanercept at $4.6 billion

• Infliximab at $4.0 billion

• Glatiramer acetate at $3.8 billion

• Pegfilgrastim at $3.5 billion

Although sales figures are down, the total number of prescriptions has continued to increase, growing at a rate of 1.2% in 2012 and 2.1% this year through August. The 2013 increase is mainly due to “one of the bigger flu seasons we have had in some time,” according to Mr. Long. In the first quarter of 2013, more than 35 million people in the United States had the flu. He added that it is difficult for retailers to forecast cough, cold, and flue prescriptions because more are for 90 days. “This year was a very unusual year,” Mr. Long said.

There has also been a shift toward specialty medications, according to Mr. Long. For the 12 months leading up to August 2013, classes of drugs that are usually prescribed by primary care physicians were down 3.4%, while drugs typically prescribed through specialty pharmacies were up 1%. There has been a trend toward more oral specialty medications, and companies have increased prices of their specialty drugs, particularly in autoimmune and neurological disorders, such as multiple sclerosis (MS).

Nearly half of the top 20 drug classes by sales are specialty medications, and Mr. Long expects the majority will be specialty in the next year or 2.

“When these products have gone generic, there have not been new brands in the market that have differentiation over the standard of care,” Mr. Long said. “Incremental improvement does not cut it in this market anymore. Differentiated improvement does. And, I think that is going to be replicated in the specialty market going forward as these spaces get a little bit more crowded.”

Last year, the FDA approved 39 drugs, the highest number of drugs since 1999. Of the 39 drugs, 30 were specialty and 9 were traditional. Mr. Long said that pharmaceutical companies are investing more in specialty drugs and not spending as much money developing primary care products. In 2007, specialty drugs accounted for a 22% market share, which increased to 28% for the 12 months prior to June 2013. Some projections indicate that specialty medications could have a 50% market share by 2020, although Mr. Long is more conservative and does not think it will reach that high.

The top areas for specialty drugs from June 2012 through June 2013 were oncologics, autoimmune disorders, HIV antiviral medications, MS, immunostimulants, and erythropoietins. During that time period, there were $92 billion in specialty drug sales, which could increase to $100 billion by the end of the year. Approximately one-third of specialty medications are delivered via mail, and another third are dispensed through clinics.

Mr. Long added that in 2012, generics accounted for 80.7% of prescriptions dispensed but only 21.7% of sales dollars. In 2008, 67.9% of prescriptions dispensed were generics, and they accounted for 14.3% of sales dollars.

Nearly $35 billion in brand drugs lost their patent in 2012, the largest annual figure that Mr. Long could remember. The products included atorvastatin calcium, clopidogrel bisulfate, pioglitazone, montelukast, and quetiapine.

Between 2013 and 2017, $86 billion worth of brand drugs will expire, according to IMS Health data. By 2016, the current top 5 selling drugs will all lose their patent. Mr. Long said that the use of generics would peak in 2016 at 87% and then decline, although it will remain above 80% for the foreseeable future. “We are going to have a generic patent cliff,” Mr. Long said.

Mr. Long acknowledged that projections are difficult because of the changes in the healthcare industry brought upon by the Patient Protection and Affordable Care Act (ACA). When the law passed in March 2010, government officials said it would lead to 40 million uninsured people gaining coverage, but Mr. Long said “it is not going to approach anywhere near that [number].”

The ACA will also contribute to a $500 billion Medicaid expansion, increased spending of $2.1 trillion, a shift away from fee-for-service payment methods, and the adoption of accountable care organizations and other delivery networks aimed at collaborative and integrated care.

The introduction of the health insurance exchanges in October was wrought with problems, according to Mr. Long. Individuals and small businesses had difficulty signing up for insurance through the Web site, and President Barack Obama’s administration vowed to fix the issues so that people could enroll in coverage by January 1, 2014. The government projected that 7 million people will obtain insurance through the exchanges next year.

Next year, there will be an estimated 5.4 million new people enrolling in Medicaid. As of October, 24 states had decided to expand Medicaid in 2014, 20 opted not to expand the program, and the 6 other states were still deciding. Mr. Long said the main issue concerns the financial sustainability of expanding Medicaid, which accounted for 24% of the states’s budgets from 2010 to 2012, according to Mr. Long. Spending on elementary, secondary, and higher education accounted for 30% of the states’s budgets.

The Congressional Budget Office in 2012 projected that the largest portion of healthcare spending will be on government programs such as Medicaid, Medicare, the Children’s Health Insurance Program, and subsidies for the exchanges.

Mr. Long said Medicaid patients have the lowest payments to see a physician and to purchase a prescription. However, they are the group most likely to end up in an emergency room at the highest possible costs, partly because doctors are not paid enough to treat Medicaid patients.

“If you are not going to reimburse the physicians enough, they are not going to want to see Medicaid patients,” Mr. Long said. “Some do not want to see Medicare patients. Some are doing concierge [medicine], and some are bailing out. Another big question for the future is, ‘Who is going to see all these new people?’”

If the ACA works as intended, Mr. Long said there will be an expanded access to healthcare, increased diagnosis of asymptomatic conditions, more adherence to clinical guidelines, and improvements in compliance and persistency rates. If it goes as planned, spending on medications will increase, but overall health costs will decline.

Mr. Long said that savings can be found through reducing readmissions, coordinating care, and optimizing the use of medications. He cited a study that found 20% of Medicare fee-for-service patients were readmitted within 30 days of discharge, while 13.4% of Medicare patients with acute myocardial infarction were re-admitted within 15 days at a cost of $136 million.

IMS Health found that the United States spends $200 billion annually due to medications not being used properly. The 6 areas of suggested improvement were medication nonadherence, delayed evidence-based treatment, antibiotic misuse, medication errors, suboptimal generic use, and mismanaged polypharmacy. If the areas are fixed, Mr. Long said it could lead to $213.2 billion in annual savings in primary care. The savings do not include specialty medications.

“Managed care pharmacies and pharmacists have the most critical role to play in addressing these issues,” Mr. Long said. “They can bring high value to each one of them.”