Americans consumed 17.6 prescriptions per person in 2018, two in three of which treated chronic conditions. Welcome to Medicine Use and Spending in the U.S. , the annual review of prescription drug supply, demand and Rx pricing dynamics from the IQVIA Institute for Human Data Science.
In a call with analysts this week in which I participated, the Institute’s Executive Director Murray Aitken discussed the report which looks back at 2018 and forward to 2023 with scenarios about what the U.S. prescription drug market might look like five years from now.
The report is organized into four sections: medical use trends; costs and spending on meds and growth dynamics underlying the top line numbers; patient out-of-pocket costs; and that five-year forecast to 2023. It’s a richly detailed report with a mine of data; in this Health Populi post, I’ll focus through the patient lens of Rx spending, medication adherence out-of-pocket costs, prescription drug abandonment, and the role of “place” in personal drug pricing.
The big picture on medical use trends is shown in the first bar chart, illustrating that: more Americans took more meds than ever in 2018. These prescriptions are increasingly filled as 90-day supplies of drugs via mail order or retail pharmacy channels. Two-thirds of Rx’s were dispensed to treat chronic conditions, notably hypertension, mental health, lipid management, diabetes, and anti-coagulants. Medicines treating hypertension experienced the largest absolute growth in number of scripts, up 48 million in 2018 over 2017; this increase was driven by an aging population and expanded guidelines in place for the treatment of high blood pressure.
Increases in prescriptions for chronic conditions were also due to growing attention to prescription drug adherence by patients. This is a good news aspect of the IQVIA report, as adherence can be a win-win-win for patients, prescribers and manufacturers alike. In 2018, we saw more incentives to inspire adherence to prescription drug regimens, particularly in Medicare Part D along with increasing focus by pharmacists and providers.
As the second chart details, adherence among patients enrolled in Medicare Part D prescription drug coverage (the green bar) had the highest levels across the three payment sources studied and in all U.S. regions.
Adherence is not equal across every state in America, IQVIA Institute learned: for major chronic conditions of hypertension, cholesterol and diabetes, adherence was a low of around 50% among Medicaid enrollees in Arkansas, Iowa and New York; and as high approaching 90% in Minnesota for Medicare Part D enrollees in that state. Vermont and Minnesota had generally higher adherence across all three payor types, versus relatively low adherence among residents in DC and Mississippi.
Another interesting aspect of medicine usage in 2018 was the adoption new flu and shingles vaccines, which outpaced other new drug starts last year. Nearly 9 in 10 new therapy starts in 2018 were in vaccines, with the rest in traditional medicines. In 2018, forty percent of new therapy starts were for Shingrix, the shingles vaccine. In 2017, nearly 60% of new therapy starts were for the Flucelvax Quadrivalent flu vaccine.
Generics have gone beyond mainstream: they’re universally used by patients who filled a prescription in 2018. When generics were available, they were dispensed 97% of the time in 2018, the third line chart demonstrates. Generic drugs comprised 90% of all dispensed prescriptions in 2018, and in many therapeutic areas generics are dispensed at near 100% of the time.
The generics story feeds into the next section of the IQVIA Institute report which quantifies medicine spending. In 2018, the total market for prescription drug spending in the U.S. was $344 billion, a 4.5% increase over 2017 net of rebates, discounts, and price concessions. This growth rate was a relative historic low level.
On a per capita basis, those $344 bn calculated to $1,044, about $10 up from 2017 and $44 up over a decade ago.
Based on that $44 increase per person in 10 years, Aitken said that relatively low level of increase in per capita spending for medicines was “lower than headlines often suggest.”
Specialty medicines are becoming a more important part of total medicines spending. IQVIA defines specialty medicines as those that treat chronic, complex or rare diseases and share several key characteristics related to their distribution, care delivery, and/or cost of the therapies: specifically, with a list price over $6,000 per year.
Specialty meds are reaching nearly one-half of medicine spending as patents expire for branded drugs and much lower-cost generics are so universally dispensed. The growth in spending is largely driven by oncology, autoimmune disease therapies, treatment for diabetes, and Hep C meds. These four classes generated over 75% of total medicine spending growth in 2018.
The growing proportion and cost of specialty drugs segues us to the next part of the IQVIA report plotline: patient out-of-pocket (OOP) costs. This takes us from the pharma manufacturer’s perspective to the patient’s role in the Rx ecosystem.
Total patient OOP costs in 2018 reached $61 billion, up $2 bn from 2017, and $5 bn from 2014. Just under 9% of patients across all three health plan types had over $500 in OOP costs in 2018. For people enrolled in Medicare Part D, 20% faced over $500 in OOP costs.
When it comes to OOP costs and patient cost exposure, there’s a direct relationship between level of cost and level of prescription abandonment. That’s the scenario when an Rx was written and sent to the pharmacy but ultimately, the patient does not pick up the medicine — thus, “abandoning” it.
Patients abandon over 20% of new prescriptions when their OOP costs rise above $50. A cost of $125 or more yields abandonment of at least 50%. The bar chart here illustrates abandonment rates for patients in commercial and Medicare plans.
Looking to the future toward 2023, IQVIA identified a roster of policies that relate to the American Patients First Blueprint that President Trump and Secretary of Health and Human Services Alex Azar unveiled in 2018. IQVIA identified several at higher probabilities of adoption, including eliminating the payer rebate safe harbor, establishing international benchmark reimbursement, capping patient costs in the catastrophic phase, reducing protected classes limitations, and eliminating cost-sharing on generics, among other provisions.
Heath Populi’s Hot Points: To complement the IQVIA Institute report, I wanted to provide some topline data from the first GoodRx Quarterly Report, published in late April 2019 based on data from the first quarter of 2019 (January 1-March 31, 2019).
Drugs continue to get more expensive, GoodRx notes, with the average list price set by manufacturers growing 2.9% over all generics and brands. GoodRx found a “huge spike” in Rx price increases in the first week of January 2019.
The 20 most expensive medications in the U.S. cost more than $25,000 for a monthly supply.
And, place matters when it comes to drug pricing, shown in the map and top-10 chart here from the GoodRx report. Living in New York City and San Francisco will price you at least 14% above the national average of drug costs, the two towns with double-digit margins above the national average of Rx’s.
If you live in greater Atlanta, you’re in luck: prescription medicines are priced about 20% lower than national average there, similarly in Dallas, Houston and Denver.
It’s important to note that place does indeed matter to the individual patient, as I point out in my book, HealthConsuming: From Health Consumer to Health Citizen. “Place matters” due to our ZIP code so profoundly influencing our health beyond our genetic code, for healthy food access, transportation, broadband connectivity, clean air and water, job opportunities and education….and here GoodRx reveals, drug pricing.
I had the opportunity to brainstorm for a few minutes with IQVIA’s Aitken about the study, and my question about those “headlines” he mentioned in his remarks. In my book, I highlight EpiPen and insulin prices as current examples of patient-consumer uproar, taking the patient-facing costs of these two life-sustaining therapies as quite personal.
Aitken explained that the issue of a patient’s out-of-pocket costs connects with the drug’s list price when it comes to amount the patient has to pay when not subject to a standard co-payment for their Rx: that individual facing sticker shock may be one of four patient-payor personae: in the deductible phase if commercially insured; in the Medicare Part D donut hole; in catastrophic care; or, filling a prescription that carries coinsurance (a percent of the manufacturer’s list price).
That exposure has become much greater as more patients have enrolled in plans with high deductibles. And that’s why this has become a bigger issue, Aitken explained.
We agreed — prescription drug pricing, from the patient’s point of view, is complicated, indeed.
But to that N of 1 patient, I said, it’s hugely personal. It impacts the household budget, already on average 20% of which is allocated to healthcare on a median national basis, HealthConsuming explains as the patient is the payor.
Yesterday’s Wall Street Journal featured an article on A $2 Million Therapy About to Hit [the] Market, discussing a new gene therapy treatment that addresses spinal muscular atrophy (SMA). Without a treatment, patients with this condition can die before their second birthday, which gives SMA the sobering distinction of being the most common genetic cause of infant death. This is a rare disease, with between 400 and 500 babies born with the genetic defect each year in the U.S.
“A therapy is useless if no one can afford it,” asserted Cathryn Donaldson from AHIP, the health insurance advocacy group, quoted in the story. AHIP has been a frequent critic of pharmaceutical and biotech industries in recent years as health reform targets have heated up in terms of regulation and price controls putting health insurance companies, pharma and biotech, and hospitals in the political bullseye on Capitol Hill, in State Houses, and as Aitken pointed out, “in the headlines.”
The politics of prescription drug pricing will continue to be personal for health care voters, I forecast in my own scenarios looking toward not 2023 — but 2020.