U.S. Prescription Drug Spending Rose 13 Percent in 2014

U.S. spending on prescription medicines jumped 13 percent to $374 billion in 2014, the biggest percentage increase since 2001, as demand surged for expensive new breakthrough hepatitis C treatments, a report released on Tuesday showed.

Demand for newer cancer and multiple sclerosis treatments, price increases on branded medicines, particularly insulin products for diabetes, and the entry of few new generic versions of big-selling drugs also contributed to the double-digit spending rise in 2014, the report by IMS Health Holdings Inc found.

IMS, a U.S. health care information and technology company, does not foresee a similar U.S. spending jump on prescription medicines this year.

“We certainly expect to see growth in the market size and spending level in 2015, but not at the rate of growth that we’re reporting for 2014,” said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, which compiled the report.

“We know that the patent expiry impact will be larger in 2015 than it was last year,” he said.

New hepatitis C treatments from Gilead Sciences Inc that virtually guarantee a cure for the liver-destroying virus, with few side effects, led more than 161,000 patients to start treatment in 2014, IMS said. That compares to just 17,000 in 2013, when thousands put off treatment while waiting for the new drugs.

Gilead reported a record-breaking $10.3 billion in first-year sales of Sovaldi as the $1,000-a-pill drug became the poster child for intense criticism of the high cost of new medicines.

The report also noted the large number of so-called orphan drugs that made it to the market in 2014, with the introduction of 18 expensive medicines for rare diseases.

Meanwhile, the entry of new generic versions of branded drugs reduced spending by only about $12 billion in 2014, compared to an impact of about $20 billion the year before and $29 billion in savings in 2012, when cheap generic versions of Pfizer Inc’s top-selling cholesterol drug Lipitor began to flood the market.

The lesser savings from generic drugs in 2014 was due in part to U.S. Food and Drug Administration sanctions against India’s Ranbaxy that delayed cheap versions of AstraZeneca Plc’s blockbuster heartburn drug Nexium.

IMS, which compiles U.S. prescription drug data for the industry, also tracked the impact of the Affordable Care Act on medicine usage, noting a significant rise in prescriptions filled through government Medicaid programs. While those rose by about 17 percent overall, the increase was 25 percent in the 28 states that expanded Medicaid eligibility under ACA.

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