Drug Costs to Rise as Much as 4 Percent in Hospitals, Clinics in 2013

PRESS RELEASE

2/15/2013

Costs for medications will continue to rise in 2013 by as much as four percent, according to a report published online today, ahead of print, by the American Journal of Health-System Pharmacy (AJHP), the professional journal of the American Society of Health-System Pharmacists (ASHP). ASHP publishes this annual projection of drug expenditures to help pharmacy and health-system leaders plan drug budgets, which are a significant operating expense.

The report, “Projecting Future Drug Expenditures in U.S. Nonfederal Hospitals and Clinics—2013,” by James M. Hoffman, Pharm.D., M.S., BCPS, et al, examines drug expenditure trends in 2011 and 2012, projects drug expenditures for 2013, and explores factors likely to influence drug expenditures. This report has been published in AJHP since 1992.

Based on a variety of data, including new drug approvals and patent expirations, the authors project a 1-3 percent increase in drug expenditures across all settings, a 2-4 percent increase in expenditures for clinic-administered drugs, and a 1.5 percent increase in hospital drug expenditures for 2013.

The rise in drug costs is less than in previous years, according to the authors. The increasing availability of less-expensive generic product is a primary factor reducing drug expenditures.

“In the aggregate, drug expenditure growth is moderating, especially in the hospital setting,” according to Hoffman, medication outcomes and safety officer and an associate member in pharmaceutical sciences at St. Jude Children’s Research Hospital, Memphis, Tenn.

“But we also see dramatic increases in growth when looking at specific drugs, such as biologics frequently used in clinics. In applying these data to a health system, it’s important to look at trends with specific drugs—both the macro and micro levels are needed to get a full picture.”

From September 2011 to September 2012, prescription sales in the U.S. totaled $326 billion, a 0.8% increase from the previous 12 months. This rate of growth is remarkable in that it was the lowest in recent history. The authors attribute this slowing to modest increases in expenditures for new products (3.3 percent) and pricing of existing products (5.9 percent), coupled with a marked decline in overall volume and mix (-8.4 percent).

Retail pharmacies, mail-order pharmacies, and clinics accounted for the vast majority of prescription expenditures. Oncology medications and biologics continue to be large and important expenditures for hospitals and clinics. Antineoplastic agents were the top medication expenditures in nonfederal hospitals in 2012, and oncology products accounted for 32.2 percent of drug expenditures in clinics during the first nine months of 2012.

Hoffman, et al, notes that significant changes in the health care landscape are prompting health systems to expand and become more integrated. To effectively manage drug costs, these changes require health-system leaders to look at medication use and expenditures across the entire pharmacy enterprise. The paper notes substantial shifts in expenditures across the continuum of care.

Hoffman added that several other developments will influence prescription drug expenditures in coming years, including the FDA’s implementation of an approval process for biosimilars and other actions that facilitate the introduction of generic drugs into the medication pipeline.

Data for the analysis were obtained from the IMS Health National Sales Perspectives (NSP) database. The NSP sample is derived from over 1.5 billion annual transactions from over 100 pharmaceutical manufacturers and more than 700 distribution centers.