In this report we bring together several perspectives on 2014: total system spending on medicines at an aggregate and segmented level; the evolution of healthcare demand, delivery and payment systems; patient out-of-pocket costs for medical and pharmacy benefits including retail prescription co-pays; and transformations in disease treatment resulting from newly approved medicines.
Summary
Medicine spending increased at the highest rate since 2001, driven by innovative new medicines, lower patent expiry impact and higher list prices. Demand for healthcare services declined in 2014 despite this being the first year of insurance coverage for millions of people under the Affordable Care Act (ACA). Some newly insured individuals, particularly in Medicaid, drove a substantial increase in dispensed prescriptions. Hospital networks are increasingly integrated and coordination of care is seen as a key approach to improving outcomes and lowering costs in the ACA, but nationally health systems remain highly fragmented. Commercially insured patients face increasingly high deductibles, and reduced their prescription usage substantially in 2014.
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Key Growth Drivers
Record setting year for US medicines
Insights from Affordable Care Act
Key Findings
Spending on medicines increased 13.1% in 2014, the highest level since 2001 when spending growth reached 17.0%
- Nominal spending on pharmaceuticals reached $373.9 billion in 2014, an increase of 13.1%, the highest increase since 2001 when spending increased 17.0%
- The sharp increase in spending in 2014 was driven by new brands, lower impact from patent expiries and increases in the list prices of branded medicines
- Spending on new brands increased by $20.2Bn in 2014, triple the previous level
- Over 161,000 patients started treatment for hepatits C in 2014, more than four times the previous peak and nearly ten times more than in the previous year as spending on widely adopted new treatments totaled $12.3Bn
- Specialty medicines now account for one-third of spending, driven by a wave of recent innovations in treatment for autoimmune diseases, hepatitis C and cancer
- Specialty medicine spending increased by 26.5% to $124.1Bn in 2014; the increase was 16.3% excluding hepatitis C treatments
- Increasing numbers of launches and growth in spending on specialty products in 2014 were driven by growing R&D focus on specialty medicines over the past decade
Specialty medicines now account for one-third of spending driven by a wave of recent innovations
Medicaid was the leading driver of retail prescription growth in the first year of expanded coverage under the Affordable Care Act
- Medicaid was the leading driver of retail prescription growth in the first year of expanded coverage under the Affordable Care Act
- Overall Medicaid prescriptions increased 16.8% in 2014, accounting for 70% of the growth in retail prescription demand
- Medicaid prescriptions increased 25.4% in states that expanded Medicaid coverage, and 2.8% in states that did not expand Medicaid coverage
- Nearly a quarter of exchange plan patients and 9% of Medicaid patients may have been previously uninsured
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News & Media Coverage
- Press Release: IMS Health Study: 2014 a Record-Setting Year for U.S. Medicines
- Time: Americans Spent a Record Amount on Medicine in 2014
- The Associated Press: IMS: US Prescription Drug Spending Jumped 13 Pct. in 2014
- New York Times: Study Finds Broad Rise in Medication Use by Those Newly Joining Medicaid
- Reuters: U.S. prescription drug spending rose 13 pct in 2014-IMS report
- LA Times: Prescription drug spending jumps 13% to record $374 billion in 2014
- Bloomberg Business: U.S. Drug Spending Increases Most in 13 Years to $373.9 Billion
