U.S. drug spending climbs 12 percent in 2015

Total spending on prescription drugs in the U.S. rose 12.2 percent to nearly $425 billion in 2015, continuing a steep climb fueled by the introduction of expensive new drugs for cancer and infections, as well as price hikes for older drugs, according to The Wall Street Journal.

Although the spending growth rate decelerated from the 14.2 percent rise in 2014, the increase in spending was still above the average for the past decade, according to research from IMS Health.

The steadily rising prices of prescription drugs have come under fire in recent years by politicians, health-care payers, doctors and patients. As drug prices climb they become less attainable to patients and becoming a strain on budgets.

Drug companies have defended their increase in prices, citing that they offer healthcare payers rebates and discounts all while keeping the specific size of the price concessions confidential.

IMS estimated that after rebates and discounts the manufacturers still received $309.5 billion last year alone, which is up 8.5 percent from 2014. “The higher total spending figure—$425 billion—is based on the list prices that pharmacies and hospital customers pay drug-wholesale distributors,” IMS said, “and while the average list price for patent-protected brands rose 12.4 percent last year, the net price growth after discounts was 2.8 percent.”

“The average cost to the patients share for a brand name prescription drug filled through a commercial health-insurance plan has increased by more than 25 percent since 2010, reaching $44 per prescription in 2015,” IMS said.

“List prices are relevant to highlight because some patients must pay full price, or a fixed percentage of the full price” said Michael Kleinrock, research director of the IMS Institute for Healthcare Informatics. “Patients are facing high costs, it’s also true the manufacturers are not pocketing all” of the higher costs.

Leading the price boost were purchases of effective and expensive new drugs for hepatitis C, such as the 2014 Gilead Sciences Inc.’s hepatitis C drug Harvoni. Which was the top-selling drug in the U.S. in 2015 with an estimated $14.3 billion in sales before discounts. Drugs for arthritis and other inflammatory conditions, including AbbVie’s Humira and Amgen’s Enbrel, were the second and third highest selling drugs, respectively.

With over half of total spending growth in 2015 being used on brands that have been available for less than two years IMS suggests that total spending on prescription drugs will continue to grow due to the new medications.