A recently released report by IQVIA – an independent organization specializing in health care research – provides new data showing prices for brand medicines went down last year. The report offers important facts to keep in mind as policymakers look to make health care more affordable. According to the report:
- Net prices for brand medicines declined by 2.9%, on average, in 2020, and net prices are expected to remain flat or decline over the next five years.
- Net spending on all prescription medicines increased by less than 1% in 2020.
- On a per person basis, spending on medicines has increased just 0.5% per year over the past decade, even as many new medicines entered the market.
- Between 2016 and 2020, loss of exclusivity or market protection lowered spending on brand medicines by $78 billion and is expected to lower spending on brand medicines by $128 billion between now and 2025.
- Biosimilar competition is expected to produce $102 billion in savings over the next five years.
- In 2020, 74% of patients spent less than $20 out of pocket to pick up their brand medicine at the pharmacy.
- Just 8% of patients spent more than $500 over the course of the year on prescriptions in 2020.
This is the latest report to show that despite the rhetoric around “skyrocketing drug prices,” the facts tell a different story. For example, the Congressional Research Service (CRS) recently released a report recapping data that shows spending for medicines remains a small and stable share of all health spending the United States:
- Retail prescription drug spending has remained stable for five decades and is expected to stay at about 9% of national health care spending through 2028, down slightly from a prior average of about 10%.
Even though spending and prices for prescription medicines remain stable, it doesn’t always feel that way for some patients. That’s because of a broken health insurance system that is increasingly shifting the cost of care onto vulnerable patients.
As the CRS report found, insurance plans have been “imposing higher levels of cost sharing” which creates “greater financial burden” for certain patients. And these shifting costs can lead to harmful consequences for patients. As IQVIA notes, 56% of all prescriptions that cost patients more than $500 out of pocket were abandoned at the pharmacy.
These facts demonstrate the need for pragmatic solutions that will help end perverse incentives in the system that disadvantage patients who need help. Partisan bills that threaten access to life-saving medicines and future innovation are not the answer.
Brian Newell is Deputy Vice President of Public Affairs at PhRMA and serves as lead spokesperson for national media. Before joining PhRMA in 2020, he served as managing director of strategic communications for the Biotechnology Innovation Organization (BIO). Prior to BIO, Brian worked on Capitol Hill for ten years, including roles on the Education and Workforce Committee, the House Republican Conference and the Ways and Means Committee. Brian graduated with a BA in Political Science from the University of Maine, his home state. He enjoys spending time with his wife and two children – especially summer vacations on the lake in Maine.