US spending on drugs will grow faster than on other health-care services over next decade

Wednesday , February 14, 2018 - 2:35 PM

Carolyn Y. Johnson

(c) 2018, The Washington Post.

Prescription drug spending will grow faster than any other major medical good or service over the next decade, according to a projection from the Centers for Medicare and Medicaid Services.

The analysis, published in the journal Health Affairs, estimates that by 2026, national health spending will climb to $5.7 trillion, or nearly a fifth of the economy. Prescription drug spending is forecast to grow at 6.3 percent per year, on average, between 2017 to 2026.

Drug spending skyrocketed in 2014 and 2015, driven largely by the use of a new generation of curative therapies for hepatitis C. When national health spending data was released in December showing a mere 1.3 percent increase in spending on prescription drugs in 2016 - a fraction of the increases in previous years - a pharmaceutical lobby spokeswoman highlighted the trend as evidence of the “nation’s competitive marketplace for medicines.”

The new analysis suggests that the low rate of increase won’t last. CMS actuaries said the secret rebates that manufacturers negotiate with health plans have helped temper the growth of prescription drug prices and spending in recent years but won’t contribute as much going forward. The prescription drug data does not include drugs administered in physicians’ offices or hospitals.

The rebates have become a major part of the pharmaceutical industry’s recent lobbying efforts, with a push for patients to receive the secretly negotiated rebates directly, when they fill their prescriptions. Critics of the industry have argued that although such a measure could provide some relief to some people, it will further insulate drug prices from any downward pressure.

The new data suggests that while rebates have been successful at helping to rein in prescription drug spending, the effect will attenuate over the next decade. The spending growth will also be driven by a shift toward specialty drugs, which cost more and often don’t carry as generous rebates.

“We’re not anticipating that drug rebates will be smaller, just anticipating that as a share of drug costs, it won’t be growing as fast as it has in past years,” said Sean Keehan, an economist in the CMS Office of the Actuary.

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