U.S. Drug Spending Expected to Increase This Year and in Years to Come, Report Shows
Despite saber-rattling, Congressional hearings, public shaming, rules regarding pricing transparency and more, the cost of spending on prescription drugs in the United States has actually increased and will likely do so for the next several years.
According to a report from Fitch Solutions Macro Research, a division of Fitch Ratings, drug spending in the U.S. is projected to grow by 2.5% this year, which will increase overall healthcare spending to $3.3 billion for 2019, Forbes reported. Despite all of the proposed regulation of drug pricing, including forcing companies to publicly disclose the list price of prescription medicines in television advertisements, spending is increasing, the report said. According to the Forbes report, Fitch Solutions is predicting that “U.S. pharmaceutical sales will account for almost 10% of overall health expenditures in 2023.” The Fitch report goes on to show that within the next four years, U.S. drug spending will reach $420.8 billion, or 9.7% of total health spending of $4.3 trillion, Forbes reported.
Since the beginning of 2019, prices have increased on more than 2,300 prescription drugs by an average of about 6.8%. In January, Johnson & Johnson raised the price of many of its most-prescribed medications by 6 and 7%. The life sciences giant followed other companies such as Pfizer, Allergan, Sanofi, GlaxoSmithKline and others who had already announced plans to increase prices this year. Lawmakers have publicly chastised and questioned the heads of some of the largest pharmaceutical companies in the world. Earlier this year, the so-called Gang of 7, executives from top pharma companies, were grilled by a U.S. Senate panel about pricing concerns and people rationing their medications. In the House, the Ways and Means Committee heard testimony from various players in the industry about the increasing out-of-pocket costs that consumers face when it comes to their prescriptions.
One of the avenues of focus that the Fitch report highlights for the U.S. government is Medicare reform. More than 10,000 of the baby boomer generation are becoming eligible for the government healthcare plan. Despite some pressure from the White House to reform the way the program can acquire prescription drugs, Congress has not passed any legislation that would support those measures, Forbes noted. Not only that, President Donald Trump has called for any healthcare reform to be delayed until after the 2020 elections, the publication said.
Congress has been conducting several investigations into the prices of drugs and the White House has been pushing for some reforms as well, including a recent proposal by Health and Human Services Secretary Alex Azar to lower the prices and out-of-pocket expenses by encouraging manufacturers to pass discounts to patients instead of insurers.
“Medicare is on course to becoming the leading payer for prescription drugs in the US,” Fitch Solutions said, according to the report. Fitch added that Medicaid is “also projected to become a more prominent payer for prescription drugs,” Forbes said.
Earlier this year, the results of a survey conducted by the Kaiser Family Foundation show that a majority of adults are in favor of government actions that could curb the cost of medication. Some of the actions supported by the poll-takers include requiring companies to include list prices of drugs in advertisements; creating easier regulatory pathways for drugs to come to market; allowing the government to negotiate drug prices for Medicare; allowing prescriptions to be imported from Canada; increasing taxes on drug companies whose prices are deemed too high; and providing Medicare with additional tools and resources when it comes to the medications covered by the program.