Prescription Drug Spending Increases 16% Over Five Years, Driven by Rising Drug Prices

Total inflation-adjusted spending on prescription drugs grew from $520 billion in 2016 to $603 billion in 2021, before accounting for rebates, according to a report published by HHS’s Assistant Secretary for Planning and Evaluation (ASPE). Retail drug expenditures represented about 70% of prescription drug spending in 2021. For retail prescription drugs, there was a 13% increase in drug spending over the five years studied, yet only a 5.7% increase in the number of prescriptions.

Meanwhile, more and more Americans received their drugs from mail order pharmacies, clinics and home health care organizations between 2016 and 2021.

spending-on-retail-and-non-retail-drugs

Specialty drug spending reached $301 billion in 2021, a 43% increase since 2016, despite the number of specialty prescriptions rising by only 0.5%. The share of retail and non-retail spending for specialty drugs increased 7.5 and 11.6 percentage points between 2016 and 2021, respectively. While the majority of prescriptions that Americans fill are for generic drugs, brand-name drugs accounted for 80% of prescription drug spending in both retail and non-retail settings.

specialty-drugs-spending

As the study suggested, spending growth on drugs was mainly driven by growth in spending per prescription rather than increased utilization. Another ASPE report showed that nearly 4,000 drugs experienced a price increase in 2022, up from 3,263 drugs in 2016. Most prescription drug price growth occurs in either January or July each year. The average price increase was almost $150 per drug in January 2022, and $250 in July.

Of the 3,940 price increases in 2022, 284 drugs’ price changes were greater than $20 per package and reflected at least a 10% change within a 12-month period. Another 314 drugs’ prices increased by more than $500 per package.

number-of-price-increases

NOTE: Four categories of sale location (Health Maintenance Organizations, Other, Prisons and Universities) were not included because they represented fewer than 2% of prescriptions in 2016 and 2021.

SOURCES: “Trends in Prescription Drug Spending, 2016-2021,” Assistant Secretary for Planning and Evaluation. “Price Increases for Prescription Drugs, 2016-2022,” Assistant Secretary for Planning and Evaluation.

This infographic was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits.

© 2024 MMIT
Jinghong Chen

Jinghong Chen Reporter

Jinghong produces infographics and data stories on health insurance and specialty pharmacy for AIS Health. She graduated from Missouri School of Journalism with a focus on data journalism and international reporting. Before joining AIS in 2018, she worked at WBEZ, Al Jazeera English and The New York Times Chinese.

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