Drug Pricing Sustainability
Spending on prescription drugs is rapidly rising and unsustainable.
- Actually, drugs account for a relatively small percentage (10-14%) of health expenditures—a figure that hasn’t materially changed in 50 years—and drug spending is expected to grow in line with overall health care costs through at least 2025.
- National Health Expenditure projections released by the Centers for Medicare & Medicaid Services (CMS) found that spending on prescription drugs had the largest decline in spending growth of all health care categories between 2015 and 2016.
- CMS estimates drug pricing growth in 2016 was just 2.1%, down from 2.5% in 2015. In 2017, CMS projects even lower pricing growth (1.6%), which would be the lowest inflation rate for drugs since 2007.
- Nearly 90% of all prescriptions in the United States today are now for low-cost generic drugs, up from less than 20 percent in 1984—saving the healthcare system more than $227 billion in 2015 and nearly $1.5 trillion over the past 10 years.
- Data from the Altarum Institute found that spending on prescription medicines grew by just 3.5 percent between November 2015 and November 2016
- Pharmacy Benefit Managers CVS Health, Prime Therapeutics, Medimpact, and Express Scripts have all reported prescription drug cost growth in the low single digits for 2016 (3.2%, 2.5%, 4.4%, and 3.8%, respectively).
Additional Reading & Resources
- Keehan, Stone, et. Al. “National Health Expenditure Projections, 2016-25: Price Increases, Aging Push Sector to 20 Percent of Economy.” Health Affairs. Published February 15, 2017.
- Rx Spending Stands Out in CMS Projections – As Slowing Down. Pink Sheets. February 22, 2017.
- Altarum Institute; CSHS Health Sector Economic Indicators Briefs
- Altarum Institute; Health Sector Economic Indicators™ - Insights from Monthly National Health Spending Data Through November 2016
- “Which PBM Best Managed Drug Spending in 2016: CVS, Express Scripts, Medimpact, or Prime?” Drug Channels. March 21, 2017.