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Wednesday, March 09, 2016

HHS: Through 2014, 30% of Rise in Prescription Drug Spending was Due to Price Increases

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The Office of the Assistant Secretary for Planning and Evaluation (ASPE) in the Department of Health and Human Services, released a report titled "Observations on Trends in Prescription Drug Spending."

Key findings of the report include:

Expenditures on prescription drugs are rising and are projected to continue to rise faster than overall health spending thereby increasing this sector’s share of health care spending.

ASPE estimates that prescription drug spending in the United States was about $457 billion in 2015, or 16.7 percent of overall personal health care services.

Expenditures on specialty drugs generally appear to be rising more rapidly than expenditures on other drugs, though estimates of specialty drug expenditures are highly sensitive to which drugs are considered “specialty” products.

ASPE also analyzed the factors contributing to the rise in prescription drug spending from 2010 to 2014.

Factors underlying the rise in prescription drug spending from 2010 to 2014 can be roughly allocated as follows: 10 percent of that rise was due to population growth; 30 percent to an increase in prescriptions per person; 30 percent to overall, economy-wide inflation; and 30 percent to either changes in the composition of drugs prescribed toward higher price products or price increases for drugs that together drove average price increases in excess of general inflation.

Unfortunately, ASPE's analysis does not include 2015, a year which saw the rise of several extremely costly Rx drugs including Harvoni and when Martin Shkreli, then-CEO of Turing Pharmaceuticals, raised the price of a specialty drug from $13.50 to $750 per pill.

Download the report here.

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