Drug Spending Increase Lower than Last 2 Years: Report

An analysis by the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary shows that national spending for prescription drugs rose just 1.3% in 2016, compared to 12% in 2014 and 9% in 2015. Kaiser Health News says in a summary that the report attributes the deceleration in spending to falling drug prices and the introduction of fewer new drugs. It also noted a decline in spending for hepatitis C drugs. The news story says their 2013 arrival sparked a national debate on drug prices when Solvaldi was sold at $1,000 per pill or $84,000 for a 12-week course of treatment.

“The $329 billion spend on prescription medications in 2016 represents 10% of overall health spending,” Kaiser says. The report noted that share was similar to 2009’s.

Total U.S. health spending rose to $3.3 trillion in 2016, but the pace slowed compared to the previous two years, CMS said. It says the analysis showed a shift from the dramatic escalation in health spending that accompanied the coverage gains in 2014 and 2015 as millions of Americans found insurance under the Affordable Care Act.

The rate at which spending grew last year was lower for Medicare, Medicaid, private insurance, prescription drugs, and hospitals than in the previous two years. Federal officials said the slow down was greater than had been predicted earlier this year.

Health spending was up 4.3% in 2016, while in 2014 and 2015 it increased 5.1% and 5.8% respectively as the Affordable Care Act provided subsidies to help people get private coverage and most states expanded Medicaid. In effect, Kaiser says, health spending has returned to the moderate growth levels that followed the 2007-2009 recession.

The Kaiser report quotes University of Southern California health policy professor Paul Ginsburg that “costs remain reasonably under control but are still [rising] at a rate that is too rapid to be affordable for society.”