Riding the bend in the health cost curve

Americans and their healthcare plans are spending less on medicines and health services. Is that a good thing?

Researchers for the IMS Institute for Healthcare Informatics posed that question with the release of a report on the U.S. pharmaceutical market this week. But pharmacy leaders, independent and chain pharmacists, the U.S. health system and healthcare advocates are going to be dealing with the implications of that trend going forward.

The IMS report, “Declining Medicine Use and Costs: For Better or Worse?,” tracks a trend that could be with us for a long time. “In 2012, both the per capita use and cost of medicines declined,” noted Murray Aitken, the institute’s executive director. The drop was real and measurable. “Total spending on medicines on a real per capita basis declined by 3.5% in 2012, as a result of declining use of branded drugs, greater availability of lower-cost generics, lower levels of price increases and reduced spending on new medicines,” the report stated.

Even seniors, the group with the highest rates of prescription use, showed small declines in use last year, IMS reported.

As Aitken points out, “For some, this will be good news and a harbinger of more efficient use of our healthcare resources. For others, this decline may indicate under-treatment and imbalance between prevention and care.”

The reasons for the falloff in Americans’ use of medicines and healthcare services are complex, said IMS, “and point to the paradox that while drug costs are actually falling for many patients, their exposure to healthcare costs is increasing.”

According to IMS, “Deductibles and out-of-pocket costs have more than tripled for insured patients in the last five years, while costs for the subset with consumer-driven health plans have gone up seven times.”

At the same time, drug costs are down for many Americans. One big reason: lower-cost generic drugs, which now make up 28% of total drug spending, according to IMS.

Here are a few of the nuggets of information that IMS sifted out of the data stream:

• The average copay for nearly three of every four prescriptions dispensed at retail in 2012 was $10 or less;


• Prescriptions for lower-income Americans on Medicaid “cost beneficiaries very little, with 95% costing less than $5 and 99% less than $10,” noted IMS;


• Patients covered by commercial, for-profit health plans “face a higher medicine copayment cost than other insured patients,” according to the report, with copays for branded drugs typically costing those patients $20 or more.

The bending downward of the medication cost and utilization curve is sure to ripple through the pharmacy profession and the vast healthcare network it supports. And it comes “as we sit on the eve of arguably the most transformative period in healthcare,” according to Aitken.

Please share your thoughts about what the decline in medicine use means for patients and pharmacy. As always, your comments are appreciated.