Dec 9, 2019

The state of prescription drug spending

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Data: Centers for Medicare & Medicaid Services' Office of the Actuary; Chart: Axios Visuals

Spending on prescription drugs in 2018 — both through premiums and out-of-pocket costs — grew a moderate 2.5% from the previous year, which was below the growth rates for hospital and doctor services.

Yes, but: That doesn't give a true accounting of total pharmaceutical spending. Spending on common and expensive drugs that are administered by providers is buried within the hospital and doctor statistics.

The big picture: Retail prescription spending stayed relatively low last year because more people used cheaper generic drugs, and because price increases were held in check, actuaries wrote in the government's report.

  • Companies have still been raising the list prices of their medicines to offset the rise in drug rebates, but the political climate has prevented companies from instituting large, frequent price increases like previous years.

But retail drug spending, which totaled $335 billion in 2018, does not factor in inpatient pharmacies, chemotherapy, infusions and other drugs that people have to receive in a hospital or clinic — drugs that equal a quarter of the entire pharmaceutical market.

  • That means spending on blockbusters like Rituxan, Opdivo, Keytruda, Eylea, Neulasta, Remicade and Lucentis is nestled within the hospital and physician data.
  • Together, those seven drugs generated $26 billion in net U.S. sales in 2018, according to company financial reports analyzed by Axios — a 12% spike from 2017.
  • Adding just those seven drugs to retail prescription spending pushes 2018's annual growth rate up to 3.1%.

The bottom line: The federal government's report on national health spending is essential reading, but it takes extra work to get the full picture of the money we spend on all drugs.

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