An influx of new generic drugs and fewer patient health care visits contributed to a 3.5% decline in per capita U.S. spending on medications last year, according to the IMS Institute for Healthcare Informatics.

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IMS Health: Per capita drug spending fell in 2012

May 10th, 2013

PARSIPPANY, N.J. – An influx of new generic drugs and fewer patient health care visits contributed to a 3.5% decline in per capita U.S. spending on medications last year, according to the IMS Institute for Healthcare Informatics.

The IMS Health unit's "Declining Medicine Use and Costs: For Better or Worse?" report, released Thursday, found that total dollars spent on drugs in the United States hit $325.8 billion in 2012, down 1% year over year.

Real per capita spending on medicines came in at $898, down $33 from 2011, as a result of decreased use of branded drugs, greater availability of lower-cost generics, lower levels of price increases, and reduced spending on new medicines, the report said.

Patent expirations in 2012 contributed $28.9 billion to the decline in drug spending — their largest-ever impact as millions of patients accessed lower-priced generic versions of additional medicines, according to IMS. Generics now account for 84% of all prescriptions.

There were 1.2% more prescriptions filled in 2012, but a 0.1% decline on a per capita basis, partly because of a milder cough, cold and flu season in the initial months of 2012, according to the report.

IMS noted that the use of health care services overall fell for the second straight year, driven in part by fewer patient visits to office-based physicians, fewer nonemergency admissions to hospitals and outpatient facilities, and a less severe flu season in the early part of 2012.

Still, the report said total health care spending is growing more rapidly than drug spending on medicines and is expected to continue to do so, at least through 2017.

Patients with insurance paid higher deductibles, co-payments and co-insurance for their overall health care, but prescription drug co-pays for most patients declined, the report revealed. The average pharmacy benefit co-pay decreased by $2 to $121 in 2012, with patients filling 72% of all retail prescriptions with a co-pay of $10 or less.

At the same time, new transformative medicines became available to treat a large number of diseases with small or strictly defined patient populations.

"The cost curve for medicines was clearly bent in 2012, for better or for worse," Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, said in a statement. "To some extent, this is a harbinger of more efficient use of our health care resources, but it also reflects a decline in utilization that may be the result of undertreatment and an imbalance between prevention and care.

"On the eve of the most transformative period in U.S. health care, understanding the drivers of this cost-curve reduction is critical to effectively addressing the long-term implications," Aitken added, referring to next year.

Starting in 2014, under the Patient Protection and Affordable Care Act (ACA), more than 30 million Americans previously lacking health insurance will be able to buy health plans through state insurance exchanges or get coverage via broader Medicaid eligibility.

Other key findings in the IMS report included the following:

• The cough, cold and flu season in 2011-2012 was weaker than in the previous year,
contributing the most to the lower per capita use of medications for those under 18 and
those 26 to 49.
• The use of prescriptions by 19- to 25-year-olds fell slightly in 2012, after having been the only group with rising usage in 2011 after the provision of the ACA allowing
them to stay on their parents' health insurance.
• Seniors remained the largest users of medicines per person but had small declines in per
capita usage of medicines.
• Most drug therapy areas had small nominal increases in prescriptions in 2012, while those with the greatest reductions in use were concentrated in the five with the largest declines, including allergy, cough and cold.
• The number of patient visits to doctors' offices fell 0.9% in 2012, a lower level of decline compared with the previous two years. Outpatient treatment and nonemergency room admissions also were down slightly. Only emergency room admissions increased, by 5.8%, last year.
• 20% of the insured patients are now in a consumer-driven health plan. Average out-of-pocket costs for commercially insured patients younger than 65 reached $1,146 in 2012, a 30% jump from 2011 and entirely the result of higher deductibles.
• Health care costs remain heavily concentrated among the relatively few patients suffering from multiple chronic conditions, cancer or other specialty diseases. In the case of the commercially insured, under age 65 population, 5% of the members incurred 51% of overall health care costs by using more than $15,684 of health services per person in 2012.

The IMS report also pointed to transformations in disease treatment last year. Patients gained access to 28 new molecular entities in 2012, including seven with orphan drug designations by the Food and Drug Administration for rare diseases, a novel oral therapy for rheumatoid arthritis, a treatment for cystic fibrosis that will significantly improve life expectancy for patients with a specific genetic mutation, and an inhalable anti-psychotic.

Nine new cancer treatments also were introduced last year, the most in more than a decade, including a breakthrough for treating basal-cell carcinoma, the report said.