Americans spent about 8 percent more on prescription drugs last year than in 2014, according to new data that links the increase to rising inflation and prices.
U.S. residents spent nearly $457 billion on prescription drugs last year, an increase above the $424 billion spent in 2014, according to federal figures released Tuesday. The figure includes spending on drugs bought at a pharmacy and those purchased by a hospital or clinic to be administered there.
The Department of Health and Human Services, which released a brief on the figures, noted that projected prescription drug spending in 2015 accounted for 16.7 percent of the $2.7 trillion that will be spent on all personal healthcare services. That was slightly above the 16.3 percent from last year.
A slew of factors were behind the rise in prescription drug spending from 2010 to 2014, HHS found. They include economy-wide inflation, population growth and a shift in the types of drugs prescribed to higher-priced products or price increases for drugs “that together drove average price increases in excess of general inflation,” the HHS brief said.
It found that the change in price for prescribed drugs increased retail drug spending, which accounts for drugs bought at a pharmacy, by an estimated 15 percent over the past five years, the brief said.
Of particular note were pricey specialty drugs that treat debilitating ailments such as hepatitis or cancer. Prices for those drugs appeared to be rising more rapidly than other products, however the estimate could fluctuate based on the definition of what is considered “specialty,” HHS said.
The brief said that of the $457 billion in drug spending, nearly 72 percent was on drugs bought at a pharmacy and about 28 percent on drugs administered in a hospital or other healthcare setting.
The findings come as politicians in both parties are trying to tackle high drug prices. Several polls have found the issue of high drug prices is a pressing concern for Americans.
A recent poll of about 1,200 adults from the Kaiser Family Foundation found that 77 percent believe making high-cost drugs for chronic conditions such as cancer and HIV affordable is a top priority.
The pharmaceutical industry has responded that prescription drug spending is traditionally a smaller share of healthcare spending overall. However, that share appears to be increasing as the share of drug spending rose from 15.4 percent in 2012 to 16.7 last year, HHS said.
The Pharmaceutical Research and Manufacturers of America, the industry’s leading pharmaceutical group, said “many factors” cause prices to fluctuate from year to year.
Those factors include “the number of new medicines approved and how many lose patent protection,” said spokeswoman Holly Campbell.
PhRMA also highlighted the competition from generic manufacturers, saying that from 2009 to 2013, about $100 billion of name-brand drugs now face competition from lower-priced generics.
The brief’s authors said that spending on drugs would continue to rise in the coming years as a share of total healthcare spending. HHS expects drug spending to rise by 7.3 percent annually until 2018.
The data was based on statistics from the National Health Expenditure Accounts, which estimates drug spending across retail outlets.
Meanwhile, HHS also released a brief on data for Medicare Part B’s pricing and incentives.
The brief found that Part B, which covers items such as injectable drugs administered in a doctor’s office, lab tests and doctors visits, provides weak incentives for physicians to consider the lowest cost therapy to treat a patient.
That is bad news for the Obama administration, which has pushed for a shift toward improving the quality of care through greater incentives for hospitals and doctors.
The brief found that CMS hasn’t applied the pricing policies used to achieve better value for self-administered drugs by commercial insurers, including those in Medicare Part D, the program’s prescription drug plan.
CMS released a proposed rule on Tuesday aimed at addressing the problem. The agency said that it wants to test a new payment model for Medicare Part B drugs.
