Prescription Drug Spending Rose 13% in 2014, Report Says

Personal Finance
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prescription drug spending

Americans spent over 13% more on prescription drugs in 2014 than they did the year before — the biggest jump since 2003, according to a new report.

New treatments for Hepatitis C and expensive specialty drugs were a big part of the spike, said Express Scripts, the largest pharmacy benefits manager in the United States, in the report.

For the past several years, annual drug spending increases had been below the overall rate of health care inflation. But that’s changing as drug prices have begun rising at what Dr. Glen Stettin, a senior vice president at Express Scripts, called “an unprecedented and unsustainable rate.”

“Now, more than ever, plans need to tightly manage the pharmacy benefit, implement smarter formularies, control compounded medication use and offer the right clinical support to ensure all patients are able to achieve the best possible health outcomes at a price our country can afford,” he said in a news release.

So-called compounded drugs accounted for 35% of the spending increase. Those drugs are personalized and prepared for individual patients. They often are used to treat complex conditions like multiple sclerosis and some cancers.

They include a new treatment for Hepatitis C, called Sovaldi, that can cost as much as $84,000 for a course of treatment, according to the Associated Press.

The cost of specialty drugs spiked 31% last year, the report said, compared with 6.5% for more traditional prescriptions.

The report projects that innovations like new cancer drugs and inhibitors for high cholesterol will continue to push prices higher. Alone, emerging PCSK9 inhibitors for blood cholesterol could run as much as $10,000 for a year’s supply and reach a patient population of as many as 10 million Americans, according to the report.

Express Scripts manages drug benefits for 85 million people. It analyzed more than 750 million pharmacy claims from its customers for its report.

Perhaps not surprisingly, Express notes that closely managed pharmacy benefit plans, like those through many employers, saw smaller increases in spending than did customers without them.

NerdWallet offers guidance on ways to find cheap prescriptions.

Doug Gross is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @doug_gross and on Google+.

Image via iStock.