Spending on prescription drugs was nearly flat during President Trump’s first year in office, according to the latest report from nonpartisan government actuaries.
In 2017, drug spending rose by 0.4 percent to $333.4 billion, the Office of the Actuaries at the Centers for Medicare and Medicaid Services reported Thursday. That was the lowest rate of growth in prescription drug spending since 2012, when it was 0.2 percent.
The slowdown in drug spending had begun in 2016, during former President Barack Obama’s final year, after rapid growth during the two previous years.
The drug industry has faced backlash over its pricing in recent years from members of Congress in both parties, and Trump has vowed to make tackling high drug prices a priority during his time in office. His administration this year released various proposals for lowering prices, including speeding up the approval of less expensive generics, allowing parts of Medicare to set prices that are more similar to what other countries pay and requiring pharmaceutical companies to post list prices on commercials.
Health and Human Services Alex Azar, who worked for pharmaceutical giant Eli Lilly, has vowed that the changes ahead will be “disruptive” to the healthcare industry, and Trump sometimes takes to Twitter to call out drug price gouging.
Thursday’s report comes before many of the administration’s proposals were laid out and before Azar took the helm at the agency. But Scott Gottlieb, the commissioner at the Food and Drug Administration, has worked to hasten the approval of generics since he started at the agency in May 2017.
The reversal represents a large shift from the years that immediately preceded it, when big price increases were the norm. Prescription drug spending grew by 8.9 percent in 2015 and by 12.4 percent in 2014 before slowing to 1.3 percent in 2016.
Drug spending in 2017 represents about 10 percent of total healthcare spending, a share that is consistent with past years despite the fluctuations in total spending from year to year. Hospitals take up the largest share of healthcare spending, accounting for 33 percent of overall healthcare spending in 2017 or $1.1 trillion in total spending.
Part of the slowdown in drug spending is attributable to a slower rate of growth in the number of people taking prescriptions. In 2016, prescription uptake grew 2.3 percent, and in 2017, it grew only 1.8 percent.
This shift reflects pressure amid the opioid crisis, which claimed the lives of more than 40,000 people in 2017. Many of the drugs to treat pain are highly addictive, and after people get hooked, they often switch to heroin, which is cheaper and more easily available. More than 2 million people in the U.S. are addicted to prescription opioids, and the government and advocacy groups have been pressuring doctors and hospitals to prescribe less of them.
“The numbers of prescription dispensed for pain had a large impact on the trend,” said Anne Martin, lead author of the report who is an economist in the actuary office, referring to lower drug spending. “A lot of that did have to do with the opioid epidemic and greater tightening of those types of prescriptions being dispensed.”
Also, fewer types of other prescription drugs were given out, more lower-cost generics hit the market, and fewer prescriptions were written for high-cost drugs, including those that cure the liver disease hepatitis C.
“The number of prescriptions dispensed slowed, and price growth also slowed for brands and declined for generics,” Martin said.
Hepatitis C is spread through blood contact, and an estimated 2.4 million Americans are infected, according to the Centers for Disease Control and Prevention. Fewer hepatitis C drugs were given out in 2017 because the people who took them in the years prior were cured and didn’t need the medication anymore.
The hepatitis C drugs are used to treat patients who might otherwise require a liver transplant and are known by their brand names Sovaldi and Harvoni, which have list prices of $84,000 and $94,000, respectively. In 2014, those drugs alone accounted for $11.3 billion in new spending.
