US Drug Prices, Healthcare Spending Soars


United States healthcare spending rose 9.7% in 2020, while medication spending is increasing by more than 18%.

United States healthcare spending rose 9.7% in 2020, while medication spending is increasing by more than 18%, according to two separate reports.

The average price of branded drugs in the U.S. has increased by a significant 18.3% per year, based on the average over the past five years, according to new research from GlobalData.

“While drug list prices have only been increasing in the U.S., major markets in the rest of the world are seeing declines,” said Floriane Reinaud, MSc, research and analysis director at GlobalData. Japan, for example, saw drug prices decline by more than 9% while Germany declined by around 7.5%.

Plus, in early January, prescription savings service SingleCare reported that pharma makers raised prices on 644 prescription drugs by an average of 5.7%.

“We’ve already seen hundreds of prescription medications that will be more expensive in 2022, with the majority being brand drugs, and the most expensive changes being for specialty medications,” said Ramzi Yacoub, Pharm.D., the chief pharmacy officer for SingleCare, in a statement.

GoodRx’s January 2022 Drug Price Increases tracker identified a similar trend in prices: 517 drugs increase in price by an average of 5%.

As governments in many countries cut drug prices, the pharmaceutical industry “is trying to compensate for revenue loss by increasing prices in the few countries where they are regulated by market forces — including the US,” Reinaud said.

However, the price increases are experienced at the published list level and, at the discount level, there are other trends that have been observed where drug prices are not increasing at the same level, Reinaud added.

“With this in mind, GlobalData still expects that prices will continue to rise in the U.S., at least at the list price level, while more competitive bidding dynamics will ensure that discounted net prices experience different trends,” Reinaud said.

Meanwhile, U.S. healthcare spending increased 9.7% in 2020 to reach $4.1 trillion, a much faster rate than the 4.3 percent increase seen in 2019, according to a new Health Affairs article.

Health Affairs attributes the 2020 hike to a 36% increase in federal expenditures — primarily in response to the COVID-19 pandemic.

“At the same time, gross domestic product declined 2.2% and the share of the economy devoted to health care spending spiked, reaching 19.7%,” Health Affairs said.

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