U.S. drug spending slows; hits $307 bln in 2010: report

NEW YORK Tue Apr 19, 2011 1:33pm EDT

A pharmacy employee places instructional stickers on a bottle as she works to fill a prescription while working at a pharmacy in New York December 23, 2009. REUTERS/Lucas Jackson

A pharmacy employee places instructional stickers on a bottle as she works to fill a prescription while working at a pharmacy in New York December 23, 2009.

Credit: Reuters/Lucas Jackson

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NEW YORK (Reuters) - U.S. spending growth on prescription drugs slowed to 2.3 percent in 2010 - the second lowest level in 55 years, according to a report by consulting firm IMS Health.

Even with the slowing growth rate, spending on prescription medicines reached $307.4 billion in the world's biggest market, the report issued on Tuesday said.

The anemic spending growth compared to a growth rate of 5.1 percent in 2009, which was helped by a lengthy and severe flu season, and was attributed to factors that include greater use of cheaper generic medicines, less spending on new therapies and fewer patients visiting doctors to begin treatments for chronic illnesses.

The lowest U.S. spending growth rate ever reported by IMS - in more than half a century of tracking it - was 1.8 percent in 2008, due in part to several widely used medicines that had recently become available as generics.

U.S. patent expirations on several widely used drugs over the next two years, including Pfizer's top-selling Lipitor, will likely lead to future slow growth rates as patients switch to less expensive generic versions.

A slow economy and high unemployment that forced many people to weigh healthcare costs against other expenses appear to have taken a toll in 2010, while a higher percentage of patients relied on government programs for their medicines.

Visits to doctors' offices declined 4.2 percent last year, and the number of patients starting new treatments for chronic conditions fell by 3.4 million, reflecting the unemployment levels, loss of healthcare coverage and more careful spending on healthcare, the IMS report said.

Commercial health insurance was used to pay for 63 percent of dispensed prescriptions, down from 66 percent five years ago. Those filled under a Medicare Part D plan or through Medicaid represented 30 percent of all prescriptions in 2010 versus 22 percent in 2006 - a clear indication of greater dependence on government programs for medicines.

Spending on generics rose 21.7 percent in 2010 compared with a spending decline of 0.7 percent for more expensive branded drugs as cheaper generic medicines now account for 78 percent of all retail prescriptions dispensed, IMS said.

A decline in truly innovative new medicines coming out of pharmaceutical company research labs was also apparent in the IMS report. Average spending per new branded product in 2010 was $62 million versus $114 million in 2006, as most new drugs that became available were similar to existing treatments.

Cancer treatments were the top therapy class in 2010 spending at $22.3 billion, followed by respiratory drugs at $19.3 billion and cholesterol and lipid treatments at $18.7 billion, IMS said.

IMS tracks prescription drug sales for the pharmaceutical industry and issues forecasts and spending reports through its Institute for Healthcare Informatics.

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