Prescription spending down for first time in decades

Total spending on U.S. medicines declined in 2012 for the first time in six decades according to a new study released yesterday by the IMS Institute for Healthcare Informatics.

The report entitled Declining Medicine Use and Costs: For Better or Worse? found that Americans spent $325.8 billion dollars on medications in 2012. This amounts to $898 per person, down $33 dollars from 2011, a decrease of 3.5 percent.

According to the report, this decrease is largely due to a number of patent expirations that allowed companies to produce lower-cost generic versions of brand-name medicines. This alone accounted for a $28.9 billion reduction in medicine spending. Lower cost generic drugs now account for 84 percent of all prescriptions.

Overall use of health care services also declined for the second straight year. The report attributes this decrease to fewer patient visits to office-based physicians, fewer non-emergency admissions to hospitals and outpatient facilities, and a less severe flu season.

Visits to doctors’ offices fell almost one percent in 2012. Outpatient treatment and non-emergency room admissions also were down slightly. On the other hand, emergency room visits rose by 5.8 percent in 2012. Use of medicines per person declined slightly.

“The cost curve for medicines was clearly bent in 2012, for better or for worse,” said Murray Aitken, executive director, IMS Institute for Healthcare Informatics, in a statement. “To some extent, this is a harbinger of more efficient use of our healthcare resources, but it also reflects a decline in utilization that may be the result of under-treatment and an imbalance between prevention and care.”

Health care costs remained heavily concentrated, among a small number of patients suffering from chronic conditions, cancer or other diseases. For those under 65 years old, five percent of the population incurred 51 percent of the cost, among commercially insured people, according to the report.

“On the eve of the most transformative period in U.S. healthcare, understanding the drivers of this cost-curve reduction is critical to effectively addressing the long-term implications,” said Aitken in a statement.