Modest Rise in Real Per Capita Spending; Fewer Physician Office Visits and New Therapy Starts Lead to Subdued Use of Medicines by Patients
PARSIPPANY, N.J.--(BUSINESS WIRE)--The IMS Institute for Healthcare Informatics today reported a 2.3 percent increase in spending on prescription medicines in the U.S. last year, markedly lower than the 5.1 percent growth rate in 2009. In a new study, The Use of Medicines in the United States: Review of 2010, the IMS Institute finds that total dollars spent on medications in the U.S. reached $307.4 billion last year - or real per capita spending of $898, up $6 from 2009. The volume of prescription medicines consumed overall rose at historically low levels in 2010.
"Last year, we saw the convergence of key dynamics leading to diminished growth in drug spending, which included the greater use of generics, loss of patent protection for major branded products, slower demand and less spending on new therapies," said Michael Kleinrock, director, Research Development, IMS Institute for Healthcare Informatics. "Moreover, fewer patients visited physician offices and initiated new chronic therapy treatments last year, likely the result of the slower economy."
In its latest analysis, the IMS Institute identifies the following key market dynamics:
- Volume of medicines consumed: The total volume of medicines consumed in oral or nasal form increased 0.5 percent in 2010, representing a decline of 0.3 percent on a per capita basis due to lower or declining demand in nearly every major therapy area. Medicines administered by injection or infusion increased 0.2 percent last year, or a per capita decline of 0.6 percent, primarily the result of reduced utilization in hospital settings.
- Patient doctor visits and new therapy starts: The number of visits to doctor offices was down 4.2 percent in 2010, extending a declining trend that began in mid-2009. Also, the number of patients starting new treatments for chronic conditions declined by 3.4 million last year. Contributing factors may include the enduring effect of high unemployment levels and rising healthcare costs, more careful healthcare spending by some, and the impact of additional patients losing their healthcare coverage.
- Patient payment for medicines: The average patient copayment was $10.73 in 2010, down 20 cents from 2009, mainly due to the increased use of generics. Commercial third-party insurance was used by patients to pay for 63 percent of dispensed prescriptions, down from 66 percent five years ago. Prescriptions filled under a Medicare Part D plan or through Medicaid coverage represented 30 percent of all prescriptions in 2010, compared with 22 percent in 2006, the first year of the Medicare Part D program.
- Pricing of medicines: The average cost of oral or inhaled medicines, which made up 60 percent of overall spending last year, declined 0.1 percent in 2010 due to changes in price as well as in the mix of generics and branded products. Costs of medicines administered by injection or infusion, representing 28 percent of spending, rose 5.7 percent last year. Spending on protected brands increased by $16.6 billion in 2010 due to invoice price changes, compared with $15.8 billion the prior year. Increasing levels of off-invoice discounts and rebates negotiated by payers and intermediaries accompanied these increases, resulting in net growth from pricing of $12.1 billion, or 4.2 percent of total spending.
- Retail channels used by patients: Of the 3.99 billion prescriptions filled through retail channels, chain drugstores increasingly were chosen by patients - reflecting both the convenience of these pharmacies and the availability of discounted generics. In addition, chain drugstores continued to acquire independent stores, and overall increased their market share by 0.5 percent last year.
- New products: Forty-four new branded products became available to patients in 2010. Ten of those products featured innovative mechanisms of action, including a new oral therapy for multiple sclerosis, a monoclonal antibody for osteoporosis and bone metastases, and a therapeutic vaccine for prostate cancer. Additionally, five orphan drugs and six new chemical entities using existing mechanisms were launched, bringing new options to patients with rheumatoid arthritis, prostate cancer and meningitis. Average spending per new branded product - those available 24 months or less - was $62 million last year, down from $114 million in 2006. This reflects a shift in the mix of new products toward orphan drugs and medicines with the same mechanism of action as existing treatments.
- Brands and generics: Spending on brands declined 0.7 percent in 2010, while spending on branded and unbranded generics rose 4.5 percent and 21.7 percent, respectively. Generics now account for 78 percent of all retail prescriptions dispensed - a result of the greater availability of molecules in generic form as patents expire, along with patients choosing lower-cost options. On average, more than 80 percent of a brand's prescription volume is replaced by generics within six months of patent loss.
The IMS Institute study also finds that in the leading therapy areas, 2010 spending growth largely was driven by product life cycle dynamics, rather than price or volume. The top five therapy classes were: oncologics, with $22.3 billion in 2010 spending; respiratory agents, at $19.3 billion; lipid regulators, at $18.7 billion; antidiabetes drugs, at $16.9 billion; and antipsychotics, at $16.1 billion. Growth in spending among these classes ranged from 0.9 percent for lipid regulators to 12.5 percent for antidiabetes medications. Notably, total spending on oncologics grew only 3.5 percent, the lowest increase ever recorded in that therapy class.
Said Kleinrock, "It became apparent in 2010 that the healthcare landscape is shifting in significant ways. Physicians and patients have more therapy options than ever, and yet spending on medicines is rising at historic lows with the impact of patent expiries and reduced patient activity. The long-term effect on patient health of fewer doctor office visits and new therapy starts is unclear and requires closer attention."
To access the IMS Institute report, The Use of Medicines in the United States: Review of 2010, go to http://www.theimsinstitute.org. The study also features additional details on the U.S. pharmaceutical market, including top therapeutic classes, products and dispensing locations.
Analyses conducted for The Use of Medicines in the United States: Review of 2010 report are based on prescription-bound products, including Insulins that are available without a prescription. OTC products are excluded from the report. Spending figures are derived from IMS National Sales PerspectivesTM and reported at wholesaler invoice prices that do not reflect off-invoice discounts and rebates. Prescription data are derived from IMS National Prescription AuditTM, which tracks national prescription trends and activity for all pharmaceutical products. Other IMS information resources used in this report include NPA Market DynamicsTM, IMS Formulary FocusTM, Plantrak CoPayTM, IMS National Disease and Therapeutic IndexTM, and IMS MIDASTM. More detail on information sources is included in the report.
About the IMS Institute for Healthcare Informatics
The IMS Institute for Healthcare Informatics, supported by IMS Health, 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: http://www.theimsinstitute.org.