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PhRMA places Rx costs into context

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The updated “Prescription Medicines: Costs In Context” report from the Pharmaceutical Research and Manufacturers of America (PhRMA) gives both a surprising and not-so-suprising snapshot of the changing Rx marketplace and how the nation’s health system is adapting.

More than 7,000 medications are in development worldwide, led by drugs for cancer (1,813), neurological disorders (1,329), infectious diseases (1,256) and immunological disorders (1,120), according to the Costs In Context report. Yet PhRMA noted that developing new medicines remains a “complex and risky undertaking,” as it takes an average 10 years and $2.6 billion to research and develop a new drug — with just 12% of drug candidates that enter clinical testing ending up being approved for use.

For example, between 1998 and 2014, 167 attempts to gain approval for a lung cancer drug failed, while just 10 succeeded. Similarly over that time frame, there were 123 unsuccessful attempts versus four successful attempts for Alzheimer’s disease drug candidates, and 96 failed and 7 successful attempts to get a melanoma medicine approved, PhRMA reported.

PhRMA_Prescription Medicines: Costs In Context report

Sources: Centers for Medicare & Medicaid Services, PhRMA.

One thing that pharmacists already know: Adherence to medications helps rein in health care costs. Citing IMS Health figures, the Costs In Context report said the U.S. health care system could save $213 billion annually if patients adhered to their prescriptions.

Looking at other research for specific chronic illnesses, the report said the per-patient difference in spending for adherent versus non-adherent patients is $1,058 for drugs and -$8,881 for medical spending with congestive heart failure, $656 for drugs and -$4,413 in medical spending for diabetes, and $429 for drugs and -$4,337 for hypertension.

Prescription drugs, however, are relatively stable in terms of their share of health care spending, with retail scripts accounting for just over 10% and non-retail scripts roughly 14% of actual and projected health expenditures from 2008 to 2024, according to the Costs In Context study.

Meanwhile, the report said, spending growth for other health care services is forecast to be five times the growth of prescription drug spending from 2016 to 2025.

Generics’ share of prescriptions climbed from 72% in 2008 to 88% in 2014, and generic medicines accounted for $1.68 trillion in savings over the 2005-2014 period, according to the study, citing research from IMS Health and the Generic Pharmaceutical Association.

From 2016 to 2020, more than $90 billion in branded drug spending (excluding biologics) will face competition from generics. The PhRMA report said that this year $23 billion in branded spending will encounter generic competitors, and that level will be nearly the same ($21 billion) in 2017.


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