Drug Expenditures Rise
By David Sobczak
The US Health and Human Services Department published a recent report finding that prescription drug spending increases are being fueled by rising prices and a transition toward pricier medications. In fact, drug spending increased 12.6 percent from 2013 to 2014 alone, and it is projected to increase from $424 billion to $457 billion from 2014 to 2015. Drug spending is expected to continue outpacing overall health care spending through 2018.
What is driving the drug spending increases? According to the aforementioned report, the total number of prescriptions went up 11 percent between 2010 and 2014, a jump the report attributes to increased prescriptions per prescribed individual along with overall population increases. Furthermore, the report suggests that, because overall spending grew faster than the number of prescriptions, higher prices may be responsible for the spending hikes. In fact, from 2010 to 2014, prescription drug spending climbed from $356 billion to $424 billion, a growth rate of 26 percent.
This is due to the trend towards so-called specialty drugs. Although only 1% of drugs prescribed, these drugs account for one-third of all drug spending. Only a couple years ago that proportion was about one-quarter. In only a few short years, the percentage of drugs that fall into this category has gone up by nearly 50%. Nearly 90% of drugs filled are cheap generics. Only about 10 percent are brand-name drugs. Increasingly, when people complain about their costly drug therapies, it will be those one percenters that cost $1,500 a month.