Real Per Capita Spending on U.S. Medicines Grows 0.5 Percent

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PARSIPPANY, NJ, April 4, 2012--The most medicines launched in a decade brought new, transformative treatment options to more than 20 million Americans in 2011, even as patients visited their physicians and used prescription drugs less often, according to a new report from the IMS Institute for Healthcare Informatics. 

The report, The Use of Medicines in the United States: Review of 2011, found that there were important variations across the country and by patient age in the use of healthcare services. Young people, age 19-25, increased their use of prescription drugs as many for the first time were able to remain on their parents' health insurance, while seniors age 65 and over reduced their volume of prescriptions.

Additionally, the availability of new generic drugs in a number of chronic therapies contributed to a minimal increase in drug expenditures overall. Total healthcare system spending on medicines reached $320 billion in 2011, up 0.5 percent on a real per capita basis.

"2011 was a remarkable year for the volume of drug breakthroughs that became available to millions of Americans," said Michael Kleinrock, director, Research Development, IMS Institute for Healthcare Informatics. "At the same time, some troubling trends that began in 2009 persisted with many patients appearing to ration their medical care. The implications of fewer doctor visits and lower drug utilization on patients' health have yet to play out and require further study."

The report's key findings include the following:

Transformative Disease Treatments. Medicines with new mechanisms of action were launched in greater numbers than in prior years, with many representing significant breakthroughs. Last year, 34 New Molecular Entities were launched in the U.S., the most in a decade. First-time therapies became available to treat several types of cancer, multiple sclerosis, hepatitis C and cardiovascular conditions. Orphan drugs, which treat rare diseases affecting less than 200,000 people, also saw the most launches in the past 10 years.
Lower Utilization of Healthcare and Medicines. Overall per capita use of medicines declined slightly in 2011, as physician office visits and non-emergency room hospital admissions dropped, and older Americans reduced their retail drug use. The number of office visits declined 4.7 percent while emergency room admissions – which are relatively small in number – rose 7.4 percent. Retail prescription usage declined on average 1.1 percent in 2011 and fell by more than 3 percent in ten states, reflecting variations in demographics, epidemiology, clinical practice and payer dynamics. Seniors age 65 and over reduced their use of prescription drugs by 3.1 percent last year, most notably in the antihypertensive class. Individuals age 19 to 25 increased their use of medicines by 2.0 percent, notably for ADHD treatments and antidepressants. This was the only age group that increased drug utilization in 2011.
Patient Payment for Medicines. Patients with insurance spent $49 billion out-of-pocket for prescription drugs, a decline of $1.8 billion from 2010. Nearly 75 percent of all prescriptions had a copay of $10 or less, but prescriptions for branded drugs covered by commercial insurance plans averaged $40 for copays. The largest decline in out-of-pocket spending was by seniors participating in Medicare Part D, where the average copay fell $2.66 to $23.31.
Usage and Spending in Major Therapy Areas. Nearly one-third of total healthcare spending was concentrated in five therapy areas – medicines used for treating cancer; asthma and chronic obstructive pulmonary disease; dyslipidemia; diabetes; and mental health medicines for psychoses or bipolar disorders.  Each of these therapy areas grew faster than the overall market and exhibited a range of dynamics related to new treatment option usage and growing diagnosis of the related disease.
Spending on Medicines. Total healthcare system spending on medicines reached $320 billion in 2011, up 0.5 percent on a real per capita basis, or 3.7 percent in nominal terms. Spending is reported at wholesaler invoice prices and does not reflect off-invoice discounts and rebates. Branded medicines spending grew 2.2 percent on a nominal basis and reflected the impact of $14.9 billion lower spending on products that lost their patent exclusivity. In 2011, spending for brands launched within the past two years was $12.2 billion, compared with $8.5 billion in the year-earlier period. Spending on generics, which now account for 80 percent of dispensed prescriptions, increased $5.6 billion in 2011. Overall spending on medicines continued to be concentrated on traditional small molecule oral pills dispensed through retail pharmacies, even as specialty drugs and biologics experienced higher growth.
The IMS Institute report, The Use of Medicines in the United States: Review of 2011, including additional findings and details on methodology, is available at www.theimsinstitute.org.

About the IMS Institute for Healthcare Informatics
The IMS Institute for Healthcare Informatics provides key policy setters and decision makers in the global health sector with unique and transformational insights into healthcare dynamics derived from granular analysis of information. It is a research-driven entity with a worldwide reach that collaborates with external healthcare experts from across academia and the public and private sectors to objectively apply IMS's proprietary global information and analytical assets. More information about the IMS Institute can be found at www.theimsinstitute.org.

About IMS Health
IMS Health is a leading provider of information, services and technology for the healthcare industry around the world. The company draws on its global technology infrastructure and unique combination of in-depth, sophisticated analytics, on-shore and off-shore commercial services, and software platforms to help clients better understand the performance and value of medicines. With a presence in 100+ countries and more than 55 years of industry experience, IMS serves leading decision makers in healthcare, including pharmaceutical manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community. Additional information is available at http://www.imshealth.com.