Spending on drugs in the U.S. dropped last year. This includes the branded drugs that Ethical Pharmaceutical Companies discover and market every day. Total spending on U.S. medicines fell 3.5% on a real per capita basis in 2012. Even more concerning, the use of healthcare services overall declined for the second consecutive year, according to a new study released by the IMS Institute for Healthcare Informatics in the report – Declining Medicine Use and Costs: For Better or Worse?
The annual analysis found that total dollars spent on medications in the U.S. reached $325.8 billion last year, or real per capita spending of $898, down $33 from 2011. That represented the first-ever decline in that measure with per-capita spending falling even more, by 3.5%.
So what has caused this reduction in spending on drugs? Underlying drivers include an ongoing decline in physician visits and higher out-of-pocket costs.
What does this mean for product managers and directors? The overall decline in healthcare service use included fewer patient visits to office-based physicians, fewer non-emergency admissions to hospitals and outpatient facilities, and a less severe flu season in the early part of 2012. The bottom line is that people went to the doctor less frequently, therefore receiving less prescriptions, and that means that product teams will be challenged to find new ways to educate health care professionals.
Part of the reason that patients went to the physician less frequently, and in turn filled less prescriptions, is the increase in out-of-pocket costs. Patients with insurance are paying higher deductibles and higher copays or co-insurance, with nearly 20% of the insured now in a consumer-driven health plan. Average out-of-pocket costs for commercially insured under 65 year old patients reached $1,146 in 2012, which is a 30% jump from 2011 and entirely the result of higher deductibles.
With patients accessing less healthcare in 2012 and patent expiries increasing as well, medicine spending reduced by a whopping $28.9 billion. This was their largest-ever impact as millions of patients accessed lower-cost generic versions of additional medicines.
With these challenges in the face of product managers, pharmaceutical brand teams will get more creative to educate their physicians on making sound prescribing decisions. While there will always be a need for safe and effective medicines that manage, treat, and cure human disease, Ethical Pharmaceutical companies will need to continue to increase the speed with which they discover and market new molecular entities to improve the lives of patients everywhere.
