Specialty Pharmaceuticals Drive Largest Increase in U.S. Drug Spending Since 2001

Americans spent nearly $374 billion on prescription drugs last year, a 13.1 percent increase over 2013, according to a new report from the IMS Institute for Healthcare Informatics, an information and technology company serving the health care industry.

The study finds that this increase, the biggest since 2001, was driven largely by the cost of innovative new specialty drugs used to treat patients with chronic conditions including cancer, HIV, AIDS, and autoimmune diseases such as rheumatoid arthritis.

Medicines are now available for previously difficult-to-treat illnesses. These advancements, however, come at a higher cost.

Public policy experts grapple with the quandary of how to keep encouraging innovation while also managing costs to patients, insurance companies, government programs, and society as a whole.

“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,” the IMS paper said.

“Last year’s $43 billion growth in spending on medicines was record-setting,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics. The increases, he said, resulted from simultaneously very high levels of spending on new drugs and an unusually low number of patents that expired.

Each year, the industry research firm produces an independent report examining trends in the pharmaceutical business. But the company, headquartered in Danbury, Connecticut, conducts the study as a public service without industry or government funding, according to this year’s document.

Specialty medicines now account for a third of all spending on medications in the United States, according to IMS.

Pew’s specialty drugs research initiative is working to identify policy options that will help manage rising specialty drug costs and provide patients with the lifesaving treatments they need.