Spending on prescription drugs slowed in 2016 after rapid growth during the two previous years, according to an analysis by the Centers for Medicare and Medicaid Services.
Prescription drug spending accelerated by 8.9 percent in 2015 and by 12.4 percent in 2014, but slowed to 1.3 percent in 2016, according to the analysis. Total expenditures on prescription drugs reached $328.6 billion, which 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.
The rapid slowdown in growth occurred because fewer new drugs hit the market, because of slower growth in prices of both brand-name and generic drugs and because fewer prescriptions were written for drugs that cure the liver disease hepatitis C.
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 hold list prices of $84,000 and $94,000, respectively. In 2014, those drugs alone accounted for $11.3 billion in new spending.
Because of the list prices, state and federal governments healthcare programs have struggled to afford the medications, leading to restrictions and waitings lists. Hepatitis C is spread through blood contact and an estimated 3 million Americans are infected, according to the Centers for Disease Control and Prevention.
Outside sources show that in 2016 spending on hepatitis C medications decreased by $3 billion, bringing overall spending on the drugs to $10 billion, Anne Martin, an author of the report and an economist from the National Health Expenditure Accounts Team, said during a press conference held by the journal Health Affairs, which published the results of the report.
"In the first two years that's when they were reaching people who needed treatment the most," Martin said. "Once they were cured the utilization dropped off so fewer patients were being treated in 2016."
Manufacturers also offered bigger rebates in 2016, Martin added.
Spending on diabetes drugs also slowed even though rates of diabetes continue to grow. The rate of drug prescribing accelerated slightly from 1.4 percent growth in 2015 to 1.9 percent growth in 2016, mostly because of prescriptions to treat high blood pressure, high cholesterol and mental health issues.
The latest 1.3 percent increase for prescription drugs is more similar to the period from 2010 to 2013 when the average rate of growth was 1.2 percent. The number of medicines approved in 2016 was 22, compared to 45 in 2015 and 41 in 2014.
The Pharmaceutical Research and Manufacturers of America, or PhRMA, said in an email that the latest data was "reaffirming how our nation’s competitive marketplace for medicines controls costs while supporting the development of new treatments and cures."
"This is possible due to a competitive marketplace for medicines where insurers and pharmacy benefit managers negotiate aggressively and generic utilization rates are nearly 90 percent," said Holly Campbell, spokeswoman for the group.
The drug industry has faced backlash over its pricing in recent years from members of Congress in both parties, and President Trump has vowed to tackle the issue. His nominee for health secretary, Alex Azar, has said that "drug prices are too high" and has said he would seek solutions if confirmed. Some Democrats have expressed concern about his commitment to the effort because he is a former executive of pharmaceutical giant Eli Lilly.
Though spending on healthcare continues to grow, at 4.3 percent in 2016, it is growing at a slower rate than last year, when it accelerated at a rate of 5.8 percent, the report found. The slowdown on prescription drugs was one contributing factor, actuaries told reporters in a press conference Wednesday.