National drug spending grew almost 8% in 2021 and is still rising
The trend is expected to continue this year, with drug spending poised to grow 4 to 6%, driven by increases in utilization, prices and new drugs.
Photo: Shana Novak/Getty Images
Total drug spending in the U.S. grew 7.7% in 2021 compared to 2020, hitting $576.9 billion in total spend, and this trend is expected to continue, with an estimated 4 to 6% increase in national drug spending in 2022, according to a new report from the American Society of Health-System Pharmacists.
ASHP focused primarily on spending by hospitals and clinics – non-federal hospitals, specifically – and assessed historical patterns by examining data on drug purchases from manufacturers using the IQVIA National Sales Perspectives database.
The group also reviewed factors that may influence drug spending in hospitals and clinics in 2022 – including new drug approvals, patent expirations and potential new policies or legislation.
The 7.7% increase in pharmaceutical expenditures was driven by a 4.8% increase in utilization, a 1.9% increase in price and a 1.1% increase in new drugs, the report found. Adalimumab was the top drug in terms of overall expenditures in 2021, followed by apixaban and dulaglutide.
Drug expenditures were $39.6 billion (a 8.4% increase) and $105.0 billion (a 7.7% increase) in non-federal hospitals and in clinics, respectively.
Several new drugs that are likely to influence spending are expected to be approved in 2022. That's one reason ASHP expects overall prescription drug spending to continue to increase. While this increase is expected to be 4 to 6% overall, clinics and hospitals are expected to see increases of between 7 and 9% and 3 to 5%, respectively.
Specialty and cancer drugs will continue to drive expenditures along with the evolution of the COVID-19 pandemic, the report found.
WHAT'S THE IMPACT
Rising prescription drug prices aren't just affecting hospitals and clinics – they're hitting Americans in their wallets. In November, the Biden Administration required private insurers to report prescription drug costs, as well as key data, to the departments of Health and Human Services, Labor and Treasury, which will work through the HHS Assistant Secretary for Planning and Evaluation to publish a report on prescription drug pricing trends and rebates, as well as their impact on premiums and consumers' out-of-pocket costs.
The data submission requirements include information on average monthly premiums and drug spending for patients, compared to their employers and/or group health plans and health insurance issuers.
The administration said that prescription drugs account for a significant portion of healthcare spending for consumers, plans, issuers and the federal government. Because of that, the interim final rule also implements requirements to identify specific cost drivers.
THE LARGER TREND
It's no secret that inflation is on the rise, with the Consumer Price Index increasing 7% in 2021 – the highest level of inflation since 1981. But according to a February GoodRx analysis, not all inflation is equal. The costs of certain goods and services are going up, while other costs are remaining stable or even trending downward.
Still, the price of prescription medications has increased at a far faster rate than inflation over the past seven years, resulting in financial hardships for many consumers. Since 2014, all goods and services have increased in price by 19%, while prescription drugs have increased in price by 35%. Prescription drug prices have also outpaced wages, gas, food, tuition, transportation, telephone and internet services, personal care, and new and used cars prices.
Typically, drug costs go up every January and July, said GoodRx. This January, 810 drugs increased in price by an average of 5.1% – mild compared to other goods and services, but still troubling.
Linking the cost of prescription drugs in the U.S. to the prices paid in other high-income nations could have reduced American spending for the drugs by at least half in 2020, a RAND study found this past September.
Modeling a proposal that would cap U.S. prices at 120% of what is paid in six other nations, researchers found that such a move would have cut U.S. spending on insulins and 50 top brand-name drugs by 52% during 2020 – a savings of $83.5 billion. These savings are on top of already-lower U.S. "net" prices after rebates negotiated between drug companies and insurers.
According to HHS data, Americans pay more than $1,500 per person for prescription drugs, far higher than other comparable nations. Since prices for brand name drugs are rising faster than the rate of inflation, it has led many to not take their medications as prescribed due to their cost. HHS has identified lack of competition as a key driver of these rising drug costs.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
