Pharmaceutical Spending the United States Allan Coukell Senior Director, Health Programs The Pew Charitable Trusts

Why are pharmaceuticals an issue? Rising prescription drug costs Up 8.4% in 2015 ($310B) 16.7% of total health spend Specialty drugs are key driver 1% of all prescriptions but 37% of drug spending Est. 50% of prescription drug spending by 2020 New drugs will increase spending $91B (projected, 2016 to 2020) Some generic drugs rising too $91B projection based on IMS pipeline analysis

Trends in Pharmaceutical Costs All drugs – in-patient, out-patient, etc.

Cost Drivers in Drug Spending Note: breakdown does not take into account rebates units here – $ billions generics bar combines utilization and price (including new generics)

Cost Drivers in Drug Spending Note: breakdown does not take into account rebates units here – $ billions generics bar combines utilization and price (including new generics)

Cost Drivers in Drug Spending Note: breakdown does not take into account rebates units here – $ billions generics bar combines utilization and price (including new generics)

Cost Drivers in Drug Spending Note: breakdown does not take into account rebates units here – $ billions generics bar combines utilization and price (including new generics)

Cost Drivers in Drug Spending Note: breakdown does not take into account rebates units here – $ billions generics bar combines utilization and price (including new generics)

Medicaid Prescription Drug Spending (2011-14) Spending on Rx remained fairly constant from 2011 to 2013. However, in 2014, both gross and net spending increased significantly, with net spending increasing 19% over the prior year. Rebates have been in the 44-49 percent range. Source: MACPAC

Medicaid Prescription Drug Spending (2011-14) Spending on Rx remained fairly constant from 2011 to 2013. However, in 2014, both gross and net spending increased significantly, with net spending increasing 19% over the prior year. Rebates have been in the 44-49 percent range. Source: MACPAC

FFS Medicaid Spending on Generics, 2014 Generics are 81% of Medicaid prescriptions but only about 20 percent of expenditures Prices of most generics are not changing. However, of the 20 drugs with highest per-unit cost increases in medicaid in 2014, seven were generic (ranging from 140% to nearly 500%) Source: ASPE

American Are Concerned

Policy ideas in play Increased competition Limits on price Faster generic, biosimilar access Imports Compounding Limits on price Thresholds Extend rebates (e.g. California Proposition 61) Transparency R&D costs PBM/price transparency Value