US Pharmaceutical Spending Growth Increased 30% in 4 Years

According to a report from the Pew Charitable Trusts, it is estimated that US retail pharmaceutical drug spending increased 26.8% between 2012 and 2016, an increase of over $90 billion.

The data shows that net retail prescription spending rose at a steady incline year-over-year from $250 billion in 2012 to $341 billion in 2016. The Centers for Medicare & Medicaid Services recently reported that spending growth slowed in 2016 to 2017, however, it projects that the rise in spending rate will continue to eclipse the growth of other types of health care spending through 2026. According to the report, “During the same time frame, the share of commercial insurance premiums for retail prescription drug coverage rose from 12.8% to 16.5%.”

The Pew report referenced an analysis conducted by IQVIA, which explains that the exponential growth in spending can largely be attributed to the debut of specialty drugs, such as those to treat hepatitis C and a variety of cancers.

Following the financial exchange in the supply chain, the Pew report showed that out of the total $341 billion in spending in 2016, employers paid $97.5 billion, patients paid $103.8 billion, and the government accounted for $139.8 billion.

After all transactions, manufacturer’s retained the lion’s share of dollars at $204.6 billion, pharmacies took in $76.9 billion, pharmacy benefit managers (PBMs) received $22.4billion, health plans retained $19.6 billion, with wholesalers pocketing $17.6 billion.

 “While the total cost of this coverage has increased, patient out-of-pocket spending has remained stable in recent years, due in part to increased insurance coverage and manufacturer assistance, such as the Part D coverage gap discount and copay coupons,” stated the report. “Rebates and other discounts have played an increasingly important role in partially offsetting the continued growth of list prices for brand name drugs. Although PBMs have passed along a growing share of manufacturer rebates to plan sponsors, these entities have slightly increased their share of the total spend through other types of revenue.”—Edan Stanley