IMS Institute for Healthcare Informatics has stated in it's study 'Medicines Use and Spending Shifts', that growth in spending on medicines was higher in 2014 than any year since 2001, and exceeded forecast overall healthcare spending growth. Spending increased by 13.1 per cent and reached at $373.9 billion in 2014, the highest level since 2001 when growth was 17 per cent. Innovative new drugs for treatment of hepatitis C, cancer and multiple sclerosis and higher spending on diabetes drugs contributed the most to spending growth.
The impact of patent expiries has consistently slowed spending growth in the past five years but the level in 2014 was the lowest in that period at only $11.9 billion, compared to the peak amount in 2012 of $29.3 billion. A period of fewer patent expiries since the middle of 2013 drove most of the reduced impact, but off-patent brands that did not face generic competition reduced the impact in 2014 by an estimated 4-5 billion.
Prices of branded products rose in 2014 at an average rate of 13.5 per cent on an invoice basis, but were reduced to 7-8 per cent taking into account off-invoice discounts and rebates which offset most of the increases. Much of the innovation-led spending growth was from specialty medicines which grew by 26.5 per cent and reached one-third of medicine spending up from 23 per cent five years ago.
New medicines contributed $20.3 billion to growth in 2014, including $11.3 billion from four new hepatitis C treatments as nearly ten times as many patients were treated in 2014 than in 2013. Over 1.61 lakh patients started treatment for hepatitis C in 2014 as spending on widely adopted new treatments totaled $12.3 billion. Diabetes spending increased 30.5 per cent to $32.2 billion in 2014. Generic spending increased $9.5 billion in 2014, driven by increased spending on generic mental health, pain and cancer medicines.
The number of new medicines reaching patients has increased in the last few years and in 2014, 41 new active substances were launched, up from 36 in 2013, and the most since 2001. Clusters of new medicines in hepatitis, C multiple sclerosis and oncology each brought major efficacy, tolerability or convenience benefits. The drug R&D pipeline has shifted to specialty medicines over the past decade and 42 per cent of the late stage pipeline is now specialty, up from 33 per cent ten years ago.
The number of orphan drugs launched peaked again with 18 in 2014 and 61 in the last five years. Cancer remains the most common orphan category, and increasingly very rare 'ultra-orphan' drugs, for populations fewer than 10,000, are being developed. Perhaps the most anticipated innovations were 'generic' versions of biologic drugs, called biosimilars because exact copies are not possible, which began to be filed for review by the FDA in 2014 and approvals began in 2015.
There are over 532 distinct research programs in late stage (phase II and greater) for the US market, 60-65 per cent of which will likely make it to market. Cancer, autoimmune and infectious disease indications lead the New Active Substance (NAS) group, specifically non-small cell lung cancer (12), rheumatoid arthritis, breast cancer and bacterial infection (9 each), followed by 8 more drugs in the hepatitis C cluster of innovation.
Demand for healthcare services declined in 2014 despite this being the first year of insurance coverage for millions of people under the Affordable Care Act (ACA). Some newly insured individuals, particularly in Medicaid, drove a substantial increase in dispensed prescriptions. Hospital network are increasingly integrated and coordination of care is seen as a key approach to improving outcomes and lowering costs in the ACA, but nationally health systems remain highly fragmented.
Commercially insured patients face increasingly high deductibles, and reduced their prescription usage substantially in 2014. Doctor office visits and hospitalizations declined in 2014, but some types of hospital admissions increased. Hospital visits dipped by 1.7 per cent in 2014, driven mainly by a decline in outpatient visits. Emergency room visits increased by 1.4 per cent during to a 3.8 per cent increase by Medicaid patients, though this was lower rate than the increased enrollment.