Tuesday 14 April 2015

New Specialty Medicines Drive Up Drug Spending

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By Karen Pallarito

HealthDay Reporter

TUESDAY, April 14, 2015 (HealthDay New) -- New medicines targeting conditions like hepatitis C, cancer and multiple sclerosis helped to propel drug spending to its highest level in more than a decade, a new report finds.

Medicine sales jumped 13 percent, to nearly $374 billion, in 2014 after a period of mostly low single-digit growth, according to the report released Tuesday by the IMS Institute for Healthcare Informatics in Parsippany, N.J.

Last year's increase was the largest since 2001, as spending rose 17 percent to nearly $174 billion on the growth of new "blockbuster" drugs, the report said.

For the report, the IMS Institute tallies U.S. drug spending across all settings -- from hospitals to retail pharmacies -- and outlines the forces channeling that growth. The institute received no drug company or government funding for the report.

New drug innovation, higher sticker prices and fewer patent expirations on brand-name medications led to sharply higher spending last year, the study authors noted.

"The good news is there's a lot going on in terms of new drug development -- a record number of new treatments and a strong pipeline that suggests we'll continue to see real high levels of innovation coming into the market," said one of the report's authors, Murray Aitken, executive director of the IMS Institute for Healthcare Informatics.

The downside is that many of these new treatments are being placed on the highest cost-sharing tiers of health plans' prescription drug lists of covered drugs, patient advocates said. In some cases, specialty medicines are not covered at all.

That leaves patients paying a significant share, or all, of their drug costs.

Daniel Klein, president and CEO at the Patient Access Network Foundation in Washington, D.C., said health benefit plans increasingly "bake in" high out-of-pocket costs, leaving many people underinsured.

"When you get into the specialty drug tiers, you can easily be looking at 40 percent coinsurance," Klein said.

Coinsurance is the percentage of the cost of covered medicines that patients have to pay themselves. Klein's organization helps insured patients pay their share of the cost of medicines for cancer, chronic illness and rare diseases.



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