TH: Feds Warn Of 'Remarkable' Rise In Drug Spending

NYAPRS Note: According to a recent report from the U.S. Department of Health and Human Services, prescription drug spending is outpacing healthcare spending. The report said that newer – so-called specialty – drugs were responsible for the uptick in spending. These particular drugs are costly to make and can be expensive even to patients who have insurance, but may have “enormous clinical benefits.”

Feds Warn Of 'Remarkable' Rise In Drug Spending

Sarah Ferris The Hill March 8, 2016

Prescription drug spending is growing at record levels, outpacing the overall spending on healthcare nationally, federal health officials warned Tuesday.

Drug spending grew by a “remarkable” 12.6 percent in 2014, according to new estimates from the Department of Health and Human Services (HHS). It will continue to increase by about 7.3 percent annually through 2018.

The sharp increase over the past two years interrupts multiple years of nearly flat spending on prescription drugs during the recession, when drug spending increased just 2 percent between 2008 and 2012.

HHS laid out the alarming uptick in prescription drug spending in a 16-page report on Tuesday.

Most of the increased spending is fueled by the demand for pricier medications, officials wrote. While the number of prescriptions rose 11 percent, drug spending increased 26 percent. The newer, more expensive medications — known as specialty drugs — are the biggest drivers of the growth in drug spending. Federal health officials note that the drugs can have “enormous clinical benefits” but can be costly to patients, “even if they are insured.”

The drugs are also expensive to make, which means the increased spending hasn't simply translated to bigger profits for the pharmaceutical industry. Revenues for brand-name drugs were “relatively flat” in 2014, the report shows.

The costs are increasing even as more patients opt for generic drugs. Demand for brand-name drugs increased more than one-third last year, helping to save billions of dollars, according to HHS.