Spending on Medicines Fell Modestly in 2012

Patent expirations in 2012 contributed an overall $28.9 billion reduction in medicine spending, according to a new report.

The report Declining Medicine Use and Costs: For Better or Worse? By the IMS Institute for Healthcare Informatics revealed that total spending on U.S. medicines fell 3.5%, or $898, per capita.

“The cost curve for medicines was clearly bent in 2012, for better or for worse,” Murray Aitken, executive director, IMS Institute for Healthcare Informatics, said in a statement.

The report found a lower use of brand drugs, likely a result of an increased availability of lower-cost generics, which accounted for 84% of all prescriptions. However, costs are still heavily concentrated among few patients suffering from chronic conditions, cancer or other specialty diseases.

The decrease in spending was also a result of a decline in the use of health care services with fewer patient visits to office-based physicians and fewer non-emergency admissions to hospitals and outpatient facilities. Patient visits to doctors’ offices fell almost 1%. However, emergency room admissions increased by 5.8%.

“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 under-treatment and an imbalance between prevention and care,” Aitken said.

Unfortunately, insured patients are feeling a hit. The average out-of-pocket costs for a commercially insured patient under the age of 65 were up 30% to $1,146. The increase was entirely a result of higher deductibles. However, the average pharmacy benefit copay declined by $2 and in 2012, 72% of all retail prescriptions had a copay of $10 or less.

“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,” he said.