Prescription Drug Spending Expected to Increase 5% in 2014
A recent report from the University of Illinois at Chicago’s Center for Pharmacoepidemiology and Pharmacoeconomic Research signals good news for the pharmaceutical industry. Over the last few years, prescription drug spending has been in decline, but this year, the trend is expected to reverse.
The downward trend, fueled by the lasting effects of the recession, the rising number of uninsured, and the lower cost of generic substitutions for blockbuster drugs such as Lipitor. As a result, even with the cost of pharmaceuticals rising, overall sales declined to a record low over the first 9 months of last year.
One of the driving factors responsible for the 3% to 5% uptick in sales is the 14 million people projected to gain medical and prescription coverage either as a result of the Medicaid expansion or the PPACA insurance exchanges.
There’s also an increasing trend to specialty pharmaceuticals to provide complex (and expensive) solutions for cancer and other chronic deadly conditions. For example, Gilead Sciences’ new hepatitis C therapy will cost $1,000 per day, which will add up to $84,000 over the full course of therapy.
The State of U.S. Health
As far as health challenges in 2014, we can expect to see a record number of retirees, complications from chronic diseases such as diabetes and hypertension, and an ongoing battle with infectious diseases, which we have fewer options to combat. The CDC identifies untreatable infections as the number one health issue we’ll be facing in 2014.
Healthcare expenditures are also expected to rise up to 6.1% and are expected to total 18.3% of the U.S. gross domestic product, a whopping $3.09 trillion. Prescription drugs account for about 11% of healthcare expenses.
Expenditures for prescription drugs will likely rise at a faster rate than many other medical services, since most newly insured people will be younger and healthier than average, and more likely to spend money on doctor visits and medications, as opposed to big-ticket hospital visits.
The increasing need for prescription drugs will affect pharmacy sales, but perhaps not as much as we’d like to see. While some of the money spent will filter through to brick and mortar sales, the report cites a 5% to 7% rise in costs attributed to drugs administered in a clinic setting, and a 1% to 3% rise in drug expenditures for hospitals.
Report co-author Dr. Glen Schumock highlights the importance of pharmacist participation to help patients. “Managing medication costs more effectively demands limiting inefficiencies by ensuring drugs are used appropriately,” Dr. Schumock said. “Knowledgeable clinical pharmacists must constantly monitor usage in their facilities and have access to patient info in order to make those kinds of decisions.”