Medicines Use and Spending in the U.S. – A Review of 2015 and Outlook to 2020

In this report, we highlight different aspects of the use of medicines in the U.S., spanning overall spending, key market segments, volumes, patient cost exposure, healthcare delivery changes as well as the outlook to 2020. 

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Summary

Spending on medicines increased by double digits for a second year in 2015 and reached $425 billion based on invoice prices. After adjusting for estimated rebates and other price concessions by manufacturers, which rose sharply in 2015, net spending was $310 billion, up 8.5% over 2014 levels. The surge of new medicines remained strong and the use of recently launched brands remained at historically high levels, while the savings from brands facing generic competition were relatively low. Specialty drug spending on a net price basis reached $121 billion, up more than 15% from 2014.

Longer-term trends driven by the Affordable Care Act and in response to rising overall healthcare costs continued to play out in 2015. In particular, healthcare is being delivered by different types of healthcare professionals and in different facilities, and patients face higher out-of-pocket costs as well as access barriers.

The outlook for medicine spending through 2020 is for mid-single digit growth driven by further clusters of innovative treatments, offset by a rising impact from brands facing generic or biosimilar competition.

Key Findings

Spending on Medicines in 2015 Increased 8.5% on a Net Price Basis to $309.5Bn and 12.2% to $424.8Bn on an Invoice Basis

  • Discounts, rebates and other price concessions on brands reduced absolute invoice spending by an estimated 27.1%.
  • Spending grew 8.5% net of off-invoice discounts and rebates, driven above the levels of the last ten years primarily by a wave of innovative new medicines.
  • Spending growth was historically high for the second year in a row, but slowed by approximately 2% from the 2014 rate on both an invoice and net basis.

Spending on Specialty Medicines in 2015 Increased 21.5% to $150.8Bn on an Invoice Price Basis

  • Specialty medicine spending increased on a net price basis by 15% to $121Bn in 2015.
  • Spending on specialty medicines doubled in the last five years, contributing 70% of overall medicine spending growth between 2010 and 2015.
  • Specialty medicines now account for 36% non-discounted medicine spending, up from 24% in 2010.
  • Increased specialty spending was driven primarily by treatments for hepatitis, autoimmune diseases, and oncology which accounted for $19.3Bn in increased spending.

Launches of Innovative Medicines Remained at High Levels in 2015 With a Total of 73 New Brands Emerging in 2015

  • Forty-three new active substances (NAS) were launched in 2015, a third with FDA orphan designation.
  • Innovative products include the first oncolytic virus therapy, new treatments for congestive heart failure in over a decade, the first in a new class of cholesterol-lowering drugs (PCSK9 inhibitors), and the first treatment for hypoactive sexual desire disorder for women.
  • Among the 30 non-NAS new brand launches were treatments for pancreatic cancer, Hepatitis C, and the first FDA approved biosimilar, along with new dosing and administration options to improve treatment adherence.

The Late Phase R&D Pipeline Remains Robust and Will Ensure an Ongoing High Number of New Brand Launches By 2020, Especially Cancer Treatments

  • The 2015 late phase pipeline includes 2,320 novel products, an increase of 9% from the 2014 pipeline analysis.
  • Of over 630 distinct research programs in Phase II or later, 37% are in the specialty market.
  • A quarter of the pipeline is comprised of oncology drugs, of which 25% are indicated for blood cancers.

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