Drug Costs Projected to Rise 3-5 Percent in 2014, Flu Vaccine Expenditures to Increase

Costs for medications are expected to rise by 3 percent to 5 percent in all healthcare settings in 2014, according to a report published online 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 hospitals and health-systems plan drug budgets, which are a significant operating expense.

The report, National Trends in Prescription Drug Expenditures and Projections for 2014, by Glen T. Schumock, PharmD, MBA, PhD, et al, will be published in the March 15, 2014, edition of AJHP and examines recent trends in drug expenditures, projects drug expenditures for 2014, and explores factors likely to influence drug expenditures.

Prescription drugs account for approximately 11 percent of overall U.S. healthcare expenditures. As with other healthcare expenditures, growth in prescription drug spending has lessened in recent years, with a 0.7 percent decrease in spending during the 12-month period ending Sept. 30, 2013 compared with 2012. The authors expect a reversal of this trend in 2014, projecting a three to five percent increase in drug expenditures across all settings, a five to seven percent increase in expenditures for clinic-administered drugs, and a one to three percent increase in hospital drug expenditures.

“Our projections for 2014 indicate a clear reversal of the downward growth in prescription drug expenditures we have seen over the last several years,” says Schumock. “Drug expenditure trends will remain dynamic, and so health systems will need to carefully monitor local drug use patterns.”

These increases in expenditures are influenced by a variety of factors, according to the report, including new drug approvals and patent expirations. Using data provided by IMS Health, the authors report several trends in prescription drug spending, including:

- Clinics and nonfederal hospitals experienced increased drug spending (4.5 percent and 1.8 percent growth, respectively) in 2013 relative to 2012, while decreased expenditures were seen in federal facilities (-13.7 percent) and in long-term care (-4.2 percent), mail order (-1.9 percent) and retail pharmacy (-0.3 percent) sectors.

- Changes in expenditures for specific medications, drug classes, and therapeutic categories. These included:

 o A significant decrease in expenditures across all settings for oxycodone.

 o A significant increase in expenditures for influenza vaccines in the clinic setting, which may be due to new vaccine formulations and vaccination recommendations.

 o A decrease in the expenditure growth rate for anti-cancer drugs (from 2012 to 2013), although anti-cancer drugs remain the top expenditure for hospitals and clinics.

o Changes in the availability of generic products, with fewer first-time generic drugs expected to reach the market in 2014.

Schumock is professor and head of the Department of Pharmacy Systems, Outcomes and Policy, College of Pharmacy, University of Illinois, Chicago. Other authors include Edward Li, associate professor of pharmacy practice, University of New England, Portland, Maine; Katie Suda, research health scientist, Department of Veterans Affairs, Center for Innovation for Complex Healthcare, Edward Hines Jr. VA Hospital, Hines, Ill.; Linda Matusiak, senior manager, research support, and Robert Hunkler, director, professional relations, IMS Health, Plymouth Meeting, Pa.; Lee Vermeulen, director, Center for Clinical Knowledge Management, UW Health, and clinical professor, University of Wisconsin, Madison; and James Hoffman, associate member in pharmaceutical sciences, and medication outcomes and safety officer, St. Jude Children’s Research Hospital, Memphis, Tenn., and associate professor of clinical pharmacy, University of Tennessee College of Pharmacy.

Source: American Society of Health-System Pharmacists (ASHP)