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The cost of prescription drugs in the United States continues to be a source of concern for patients, caregivers, and policymakers. Drug prices typically decline rapidly once generic drugs receive US Food and Drug Administration (FDA) approval and enter the market, but the past decade has witnessed rising costs and shortages of generic drugs. We describe the strategies used by brand-name manufacturers to undermine generic competition and the reasons underlying the price increases of off-patent drugs, some of which continue to lack any competition from generic versions, and others that have increased in price despite having generic versions. We discuss the FDA's role in addressing drug prices and promoting competition, including recent agency policies to modify its process of reviewing generic drug applications and to prioritize applications for off-patent drugs with few competitors. We also examine proposed policy solutions and research areas that could help address the price increases of off-patent drugs., (© 2018 American Society for Clinical Pharmacology and Therapeutics.)

Background: Drugs are most typically defined as specialty because they are expensive; however, other criteria used to define a drug as specialty include biologic drugs, the need to inject or infuse the drug, the requirement for special handling, or drug availability only via a limited distribution network. Specialty drugs play an increasingly important role in the treatment of chronic conditions such as multiple sclerosis (MS), rheumatoid arthritis (RA), psoriasis, and inflammatory bowel disease (IBD), yet little is known regarding the comprehensive medical and pharmacy benefit utilization and cost trends for these conditions., Objective: To describe MS, RA, psoriasis, and IBD trends for condition prevalence, treatment with specialty drugs, specialty costs, nonspecialty costs, and total direct costs of care within the medical and pharmacy benefits., Methods: This was a descriptive analysis of a commercially insured population made up of 1 million members, using integrated medical and pharmacy administrative claims data from 2008 to 2010. Analyses were limited to continuously enrolled commercially insured individuals less than 65 years of age. Condition-specific cohorts for MS, RA, psoriasis, and IBD were defined using standardized criteria. Trends in condition prevalence, specialty drug use for the conditions, and direct total cost of care were analyzed. The direct costs were subcategorized into the following: medical benefit specialty drug costs, medical benefit all other costs, pharmacy benefit specialty drug costs, and pharmacy benefit all other costs. Trends and compound annual growth rates were calculated for the total cost of care and subcategory costs from 2008 through 2010., Results: Condition prevalence ranged from a low of 1,720 per million members for MS to a high of 4,489 per million members for RA. Psoriasis and MS condition prevalence rates were unchanged over the 3 years; however, IBD prevalence increased 7.0%, and RA prevalence increased 9.7%. The rate of specialty drug use was lowest for IBD (13.7%) and highest for MS (71.8%). The lowest total annual cost of care was for psoriasis ($14,815), and the highest total annual cost was for MS ($36,901). The most commonly used specialty drugs for each of the conditions were as follows: glatiramer (MS), etanercept (RA and psoriasis), and infliximab (IBD). The total annual costs were more than double for the specialty drug users for psoriasis compared with all the psoriasis members ($29,565 vs. $14,815). The total costs were only somewhat higher among MS members using specialty drugs ($41,760 vs. $36,901). Among specialty drug users for each of the cohorts, the annual costs of specialty drugs accounted for 50% or more of the total annual costs. The annual spending growth rate for specialty drugs ranged from 4.4% to 18.0%., Conclusions: Although specialty drug utilization varied widely across the 4 chronic conditions analyzed, when specialty drugs were used they accounted for the majority of the annual total direct cost of care. Because specialty drugs are accounting for a growing portion of chronic disease total cost of care, health insurers will need to become more vigilant regarding specialty drug use and focus on 4 cost saving management opportunities: drug distribution channel, utilization management, contracting activities, and care coordination.

Purpose: Factors likely to influence drug expenditures, drug expenditure trends in 2012, and projected drug expenditures for U.S. nonfederal hospitals and clinics in 2013 are discussed., Methods: Prescription drug expenditure data for 2011 through September 2012 were obtained from the IMS Health National Sales Perspectives database. Expenditure projections were based on a combination of quantitative and qualitative analyses, combined with expert opinion., Results: Total prescription sales in the United States for the 12-month period ending September 2012 were $326.0 billion, a 0.8% increase from the previous 12 months. This rate of growth was the lowest in recent history and can be attributed to modest increases in expenditures for new products (3.3%) and the prices of existing products (5.9%), coupled with a marked decline in overall volume and mix (-8.4%). For the 9 months ending in September 2012, total prescription expenditures grew 2.7% when compared with the same period in 2011. Oncology products remained important expenditures for hospitals and clinics. Antineoplastic agents were the top medication class for expenditures in nonfederal hospitals, and oncology products accounted for 32.2% of drug expenditures in the clinic setting in the first 9 months of 2012., Conclusion: For 2013, we project a 1-3% increase in total drug expenditures across all settings, a 2-4% increase in expenditures for clinic-administered drugs, and a 0.5% decline to 1.5% increase in hospital drug expenditures. Health-system pharmacy leaders should carefully examine their own local drug-utilization patterns to determine their own organization's drug expenditure forecast.

Purpose: Factors likely to influence drug expenditures, drug expenditure trends in 2010 and 2011, and projected drug expenditures for 2012 are discussed., Summary: Data were analyzed to provide drug expenditure trends for total drug expenditures and the hospital and clinic sectors. Data were obtained from the IMS Health National Sales Perspectives database. From 2009 to 2010, total U.S. drug expenditures increased by 2.7%, with total spending rising from $299.2 billion to $307.5 billion. Drug expenditures in clinics grew by 6.0% from 2009 to 2010. Hospital drug expenditures increased at the moderate rate of 1.5% from 2009 to 2010; through the first nine months of 2011, hospital drug expenditures increased by only 0.3% compared with the same period in 2010. The dominant trend over the past several years is substantial moderation in expenditure growth for widely used drugs, primarily due to the ongoing introduction and wide use of generic versions of high-cost, frequently used medications. At the end of 2010, generic drugs accounted for 78% of all retail prescriptions dispensed. Another pattern is substantial increases in expenditures for specialized medications, particularly in the outpatient setting as growth in prescription drug expenditures for clinic-administered drugs consistently outpaces growth in total expenditures. Various factors are likely to influence drug expenditures in 2012, including drugs in development, the diffusion of new drugs, generic drugs, drug shortages, and biosimilars., Conclusion: For 2012, we project a 3-5% increase in total drug expenditures across all settings, a 5-7% increase in expenditures for clinic-administered drugs, and a 0-2% increase in hospital drug expenditures.

PURPOSE. Drug expenditure trends in 2009 and 2010, projected drug expenditures for 2011, and factors likely to influence drug expenditures are discussed. SUMMARY. Various factors are likely to influence drug expenditures in 2011, including drugs in development, the diffusion of new drugs, generic drugs, health care reform, and biosimilars. Two distinct patterns of drug expenditures continue to exist. The dominant trend over the past several years is substantial moderation in expenditure growth for widely used drugs, primarily due to the ongoing introduction of generic medications for high-cost, frequently used medications and the influence of the economic downturn. The second pattern is substantial increases in expenditures for specialized medications, particularly in the outpatient setting. The influence of health care reform, the economy, and the emergence of biosimilars will be important trends to follow over the next several years, but they are unlikely to have substantial impact on drug expenditures in 2011. From 2008 to 2009, total U.S. drug expenditures increased by 5.2%, with total spending rising from $284.8 billion to $299.5 billion. Growth in drug expenditures in clinics grew by 5.1% from 2008 to 2009. Hospital drug expenditures increased at the moderate rate of 2.8% from 2008 to 2009; through the first nine months of 2010, hospital drug expenditures increased by only 0.8% compared with the same period in 2009. CONCLUSION. For 2011, we project a 3-5% increase in drug expenditures in outpatient settings, a 4-6% increase in expenditures for clinic-administered drugs, and a 1-3% increase in hospital drug expenditures.

Purpose: Drug expenditure trends in 2008 and 2009, projected drug expenditures for 2010, and factors likely to influence drug expenditures are discussed., Summary: Various factors are likely to influence drug expenditures in 2010, including drugs in development, the diffusion of new drugs, generic drugs, health care reform, drug safety concerns, and comparative effectiveness research. The increasing availability of important generic drugs continues to moderate growth in drug expenditures. Health care reform initiatives, including the potential for biosimilars legislation, will influence drug expenditures in all settings. From 2007 to 2008, total U.S. drug expenditures increased by 1.8%, with total spending rising from $279.6 billion to $284.7 billion. Growth in drug expenditures in clinics declined to the lowest level in a decade, a 1.0% increase from 2007 to 2008. Hospital drug expenditures increased at a moderate rate of only 2.1% from 2007 to 2008; through the first nine months of 2009, hospital drug expenditures increased by 3.0% compared with the same period in 2008., Conclusion: In 2010, we project a 3-5% increase in drug expenditures in outpatient settings, a 6-8% increase in expenditures for clinic-administered drugs, and a 2-4% increase in hospital drug expenditures.

Objectives: The objective of this report is to provide guidance and recommendations on how drug costs should be measured for cost-effectiveness analyses conducted from the perspective of a managed care organization (MCO)., Methods: The International Society for Pharmacoeconomics and Outcomes Research (ISPOR) Task Force on Good Research Practices-Use of Drug Costs for Cost Effectiveness Analysis (DCTF) was appointed by the ISPOR Board of Directors. Members were experienced developers or users of CEA models. The DCTF met to develop core assumptions and an outline before preparing a draft report. They solicited comments on drafts from external reviewers and from the ISPOR membership at ISPOR meetings and via the ISPOR Web site., Results: The cost of a drug to an MCO equals the amount it pays to the dispenser for the drug's ingredient cost and dispensing fee minus the patient copay and any rebates paid by the drug's manufacturer. The amount that an MCO reimburses for each of these components can differ substantially across a number of factors that include type of drug (single vs. multisource), dispensing site (retail vs. mail order), and site of administration (self-administered vs. physician's office). Accurately estimating the value of cost components is difficult because they are determined by proprietary and confidential contracts., Conclusion: Estimates of drug cost from the MCO perspective should include amounts paid for medication ingredients and dispensing fees, and net out copays, rebates, and other drug price reductions. Because of the evolving nature of drug pricing, ISPOR should publish a Web site where current DCTF costing recommendations are updated as new information becomes available.

Background & Aims: Direct-to-consumer advertisement (DTCA) and physician promotion of drugs can influence patient and physician behaviors. We sought to determine the relationship between promotion of tegaserod and the number of office visits for abdominal pain, constipation, and bloating; diagnoses of irritable bowel syndrome (IBS); and tegaserod prescriptions., Methods: We used an Integrated Promotional Services database to estimate tegaserod DTCA and promotion expenditures; the National Ambulatory/Hospital Medical Care Surveys (1997-2005) to estimate the number of ambulatory care visits for abdominal pain, constipation, and bloating and diagnoses of IBS; and IMS Health's National Prescription Audit Plus (Fairfield, CT) to estimate the number of prescriptions. We constructed segmented and multivariate regression models to analyze the data., Results: In the 3 months immediately following the start of tegaserod DTCA, there was a significant increase in physician visits (by 1 million; 95% confidence interval [CI], 0.5-1.6 million) and IBS diagnoses (by 397,025; 95% CI, 3909-790,141). Subsequently, the trend of visits and IBS diagnoses was reduced. In multivariate analyses that examined the overall relationship of promotion with visits, diagnoses, and prescriptions, only the relationship between physician promotion and tegaserod prescribing was significant; every $1 million spent on physician promotion resulted in an additional 4108 prescriptions (95% CI, 2526-5691)., Conclusions: The initial DTCA of tegaserod was associated with a significant, immediate increase in physician visits and IBS diagnoses. This trend reversed and, in multivariate models, neither DTCA nor physician promotion correlated with visits or diagnoses. Physician promotion (although not DTCA) correlated with tegaserod prescription volume.

Purpose: Drug expenditure trends in 2007 and 2008, projected drug expenditures for 2009, and factors likely to influence drug expenditures are discussed., Summary: Various factors are likely to influence drug expenditures in 2009, including drugs in development, the diffusion of new drugs, drug safety concerns, generic drugs, Medicare Part D, and changes in the drug supply chain. The increasing availability of important generic drugs and drug safety concerns continue to moderate growth in drug expenditures. The drug supply chain remains dynamic and may influence drug expenditures, particularly in specialized therapeutic areas. Initial data suggest that the Medicare Part D benefit has influenced drug expenditures, but the ultimate impact of the benefit on drug expenditures remains unclear. From 2006 to 2007, total U.S. drug expenditures increased by 4.0%, with total spending rising from $276 billion to $287 billion. Drug expenditures in clinics continue to grow more rapidly than in other settings, with a 9.9% increase from 2006 to 2007. Hospital drug expenditures increased at a moderate rate of only 1.6% from 2006 to 2007; through the first nine months of 2008, hospital drug expenditures increased by only 2.8% compared with the same period in 2007., Conclusion: In 2009, we project a 0-2% increase in drug expenditures in outpatient settings, a 1-3% increase in expenditures for clinic-administered drugs, and a 1-3% increase in hospital drug expenditures.

Purpose: Drug expenditure trends in 2006 and 2007, projected drug expenditures by setting for 2008, and factors likely to influence drug expenditures are discussed., Summary: Various factors are likely to influence drug expenditures in 2008, including drugs in development, the diffusion of new drugs, drug safety concerns, generic drugs, Medicare Part D, and changes in the drug supply chain. The increasing availability of important generic drugs and drug safety concerns continue to moderate growth in drug expenditures. The drug supply chain remains dynamic and may influence drug expenditures, particularly in specialized therapeutic areas. Initial data suggest the Medicare Part D benefit has influenced drug expenditures, but the ultimate impact of the benefit on drug expenditures remains unclear. From 2005 to 2006, total drug expenditures increased by 8.7% to $275 billion. Drug expenditures in clinics continue to grow more rapidly than in other settings, with a 20.9% increase from 2005 to 2006, and drug expenditures in clinics are now greater than the amount spent in hospitals. Hospital drug expenditures increased at a moderate rate of only 3.8% from 2005 to 2006; through the first nine months of 2007, hospital drug expenditures increased by only 2.2% compared with the same period in 2006., Conclusion: In 2008, we project a 5-7% increase in drug expenditures in outpatient settings, a 12-14% increase in clinics, and a 4-6% increase in hospitals.

Purpose: Drug expenditure trends in 2005 and 2006, projected drug expenditures for 2007, and factors likely to influence drug costs are discussed., Summary: Various factors are likely to affect drug costs, including drug prices, drugs in development, and generic drugs. In 2005, there was a continued moderation of the increase in drug expenditures. Total prescription drug expenditures increased by 5.5% from 2004 to 2005, with total spending rising from $239 billion to $252 billion. Through the first nine months of 2006, hospital drug expenditures increased by only 3% compared with 2005. This moderation of the growth of prescription drug expenditures can be attributed to three major factors: availability of major prescription drugs in generic form, continued increase in cost sharing for employees in employer-sponsored health plans, and decreased use due to safety concerns. It is expected that expenditures in 2007 will be influenced by similar factors, with few costly new products reaching the market, increased concern over product safety reducing the use of older agents and slowing the diffusion of newer agents that do reach the market, and several important patent expirations, leading to slower growth in expenditures., Conclusion: In 2007, we project a 5-7% increase in drug expenditures in outpatient settings, a 14-16% increase in clinics, and a 4-6% increase in hospitals.

Purpose: Drug expenditure trends in 2004 and 2005, projected drug expenditures for 2006, and factors likely to influence drug costs are discussed., Summary: Various factors are likely to affect drug costs, including drug prices, drugs in development, and generic drugs. In 2004 there was a continued moderation of the increase in drug expenditures. Drug expenditures increased by 8.7% from 2003 to 2004. Through the first nine months of 2005, expenditures increased by only 8.1% compared with 2004. This moderation can be attributed to several factors, including the continued trend toward higher prescription drug cost sharing for insured consumers, growing availability of generic drugs, and lack of "blockbuster" new drugs in recent years. Drug expenditures in 2006 will likely be influenced by similar factors, with few costly new products reaching the market, increased concern over product safety slowing the diffusion of those new agents that do reach the market, and several important patent expirations, leading to slower growth in expenditures., Conclusion: Forecasting and managing rising drug expenditures remains a challenge. Pharmacy managers must remain vigilant in monitoring drug costs in their health system and take a proactive role in pursuing efficient drug utilization. The dynamic health policy environment further complicates drug budgeting and must be considered, especially in integrated health systems responsible for managing inpatient, outpatient, and clinic drug costs. The comparison of health-system-specific data and trends with the national information presented in this article may provide a useful context when presenting institutional drug costs to senior management.

Purpose: Drug expenditure trends in 2003 and 2004 and projected drug expenditures for 2005 are discussed., Summary: Various factors are likely to affect drug costs, including drug prices, drugs in development, and generic drugs. In 2003 there was a continued moderation of the increase in drug expenditures. Drug expenditures increased by 11.4% from 2002 to 2003. Through the first nine months of 2004, expenditures increased by only 8.7% compared with 2003. This moderation can be attributed to many factors, particularly patent expirations, prescription-to-nonprescription conversions and a continued slowdown in new drug approvals. Higher cost sharing for consumers and continued weaknesses in several sectors of the U.S. economy affecting employment levels and insurance coverage also contributed to this smaller increase in drug utilization. It is expected that 2005 drug expenditure growth will out-pace the growth in overall health care expenditures and growth in the economy., Conclusion: In 2005, there should be a 10-12% increase in drug expenditures in outpatient settings, a 12-15% increase in clinics, and a 6-9% increase in hospitals.

Purpose: Drug expenditure trends since 2002 and projected drug expenditures for 2004 are discussed., Summary: In 2002 there was a moderation in the trend of increasing drug expenditures. Drug expenditures increased by 12.3% between 2001 and 2002. This trend continued in the first half of 2003, with expenditures increasing by only 10% compared with 2002. This moderation in the drug expenditures trend can be attributed to many factors, especially patent expirations and decreases in new drug approvals. Higher cost sharing for consumers and a general economic slowdown in the United States affecting employment and insurance coverage have resulted in a smaller increase in drug utilization. In 2004, there should be a 10-12% increase in drug expenditures for outpatient settings, a 19-21% increase for clinics, and a 6-8% increase for hospitals., Conclusion: Drug expenditure growth should continue to outpace the growth in overall health care expenditures and the growth in the U.S. economy.

Drug expenditure projections for 2003 and factors likely to influence drug costs are discussed. The United States continues to face the challenge of increased growth in health expenditures, and drug expenditures are continuing to increase faster than the growth in total health care expenditures. These increases can be largely attributed to an increase in the average age of the U.S. population and technological advancement. On the basis of price inflation and non-price inflationary factors, including increases in volume, shifts in patient and therapeutic intensity, and expected approval of new drugs, a 10-12% increase in drug expenditures in 2003 for the inpatient setting and a 13.5-15.5% increase for ambulatory care settings are forecasted. While few new drugs are expected to greatly influence expenditures in 2003, the continued diffusion of recently approved drugs such as drotrecogin alfa and nesiritide will have a dramatic impact on total drug expenditures and must be carefully considered in the budgeting process. An agent likely to have a significant impact on HIV treatment is enfuvirtide, the first in a new class of antiretrovirals (fusion inhibitors), but its high cost ($10,000-$15,000 per year) may limit patients' access to this medication. An expanded user's guide is provided to assist the reader in appropriate application of this information in the drug budgeting process. Technological, demographic, and market-based changes and changes in public policy will continue to influence pharmaceutical expenditures in the coming year. An understanding of the overall drivers of medication expenditures and vigilance in monitoring pharmaceutical innovation are critical in the effective management of these resources.

Drug-cost projections for 2002 and factors likely to influence drug costs are discussed. The United States continues to face the challenge of increased growth in health expenditures, and pharmaceutical expenditures continue to increase significantly faster than the growth in total health care expenditures. These increases can be largely attributed to a combination of general inflation, an increase in the average age of the U.S. population, and the increased use of new technologies. On the basis of price inflation and nonprice inflationary factors, including increases in volume, shifts in patient and therapeutic intensity, and the expected approval of new drugs, we forecast a 15.5% increase in drug expenditures in 2002 for hospitals and clinics and an 18.5% increase for ambulatory care settings. One of the most substantial contributors to the rise in pharmaceutical expenditures over the past decade is the successful introduction and rapid diffusion of new pharmaceuticals. Data about many new drugs on the horizon are provided. One agent likely to have the highest impact on hospitals in the next year is drotrecogin alfa for the treatment of sepsis. The cost of this agent is expected to range from $3,000 to $10,000 per patient per course of therapy. Other factors influencing medication costs, including generic medications, legislative initiatives, and the recent acts of terrorism committed against the United States, are also discussed. Technological, demographic, and market-based changes, and possibly public policy changes, will have a dramatic influence on pharmaceutical expenditures in the coming year. An understanding of what is driving the changes is critical to the effective management of these resources.