2014 Yields Record Pharma Spending Growth

In 2014, American spending on pharmaceuticals increased by 13.1%, growing at a pace that has not been matched since 2001.[1] Furthermore, the FDA approved a total of 41 new molecular entities in 2014, including 17 that are designated for the treatment of orphan diseases.[2] As a result, doctors can now prescribe a variety of new medications to treat patients and help individuals stay healthier. This is very good news for healthcare.

One of the largest contributors to this spending growth was specialty pharmaceutical sales, which increased by about 25%.[3] This was primarily driven by prescriptions for new oncology medications and an additional 161,000 Hepatitis C patients beginning treatment.[4] Specialty pharmaceuticals are expected to command an increasingly larger percentage of total pharmaceutical sales going forward, especially as research and development spending continues to soar. By 2018, specialty pharmaceuticals are expected to account for approximately half of the top 100 drugs on the market.[5] This will increase the number of diseases states that health care professionals can treat with pharmaceuticals.

Research conducted on 93 patients in the United States by the University of Columbia showed that an increase of 100 prescriptions received by the patient group decreased their collective time spent in hospitals by an average of 16.3 days.[6] Furthermore, each dollar spent on pharmaceuticals in this study reduced patient hospital care expenses by $3.65.[7] As medical expenses skyrocket in the United States, increased pharmaceutical utilization can be an effective way to reduce costs to patients while improving the quality of patient care. Pharmaceuticals currently account for only 9% of U.S. healthcare spending, but as specialty drugs begin to gain more FDA approvals than traditional medications, annual pharmaceutical spending is likely to increase by 9% to 10% per year.[8]These trends toward increased prescription utilization will likely lead to better overall healthcare, less time spent in hospitals for patients, and lower costs associated with hospitalizations.


References

[1]Medicines Use and Spending Shifts: A Review of the Use of Medicines in the U.S. in 2014. (2015, April 1). Retrieved May 11, 2015, from http://www.imshealth.com/vgn-ext-templating/v/index.jsp?vgnextoid=3f140a4331e8c410VgnVCM1000000e2e2ca2RCRD&vgnextchannel=8c7de5fda6370410VgnVCM10000076192ca2RCRD&vgnextfmt=default

[2] Blank, C. (2015, February 2). FDA approved more than 40 novel drugs in 2014. Retrieved May 11, 2015, from http://drugtopics.modernmedicine.com/drug-topics/news/fda-approved-more-40-novel-drugs-2014?page=full

[3] James, D. (2015, April 16). Specialty Drugs Drive US Medicine Spending Spike. Retrieved May 11, 2015, from http://www.pharmacytimes.com/news/Specialty-Drugs-Drive-US-Medicine-Spending-Spike

[4] Sullivan, T. (2015, April 15). U.S. Spent $374 Billion on Prescription Drugs Last Year, Up 13%; Increase Largely Due To Hep C Cures and Limited Generic Competition – Policy and Medicine. Retrieved May 11, 2015, from http://www.policymed.com/2015/04/us-spent-3739-billion-on-prescription-drugs-last-year-up-131-percent-increase-largely-due-to-hep-c-c.html

[5] Thigpen, A. (2015, April 24). The Rise of Specialty Pharmaceuticals. Retrieved May 11, 2015, from http://www.biotech-now.org/health/2013/04/the-rise-of-specialty-pharmaceuticals

[6] Lichtenberg, F. (1996, May 1). Do (More and Better) Pharmaceuticals Keep People out of Hospitals? Retrieved May 11, 2015, from https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/157/AER96.pdf

[7] Lichtenberg, F. (1996, May 1). Do (More and Better) Pharmaceuticals Keep People out of Hospitals? Retrieved May 11, 2015, from https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/157/AER96.pdf

[8] The cost of innovation: A closer look at specialty drugs. (2014, May 1). Retrieved May 11, 2015, from http://www.pwc.com/en_US/us/health-industries/behind-the-numbers/assets/pwc-pharma-specialty-drug-infographic.pdf

ABOUT THE AUTHOR

Daniel J. Rehal

Daniel J. Rehal

As President of Vision2Voice, Daniel thoroughly understands the pharmaceutical industry from the ground floor up. By ascending the ranks at Merck to his global responsibilities at Takeda, Dan has significant experience in both marketing and sales roles supporting a multitude of pharmaceutical brands as an award-winning Sales Representative, Training Manager, District Manager, Senior Product Manager, and Marketing Director.

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