Even as Prescription Drug Volume Stagnates, Prices Soar.
Total US spending on prescription drugs in 2015, at the manufacturers’ level and as measured by “invoice pricing,” jumped by 12.2% to $424.8 billion, after having already soared 14.2% in 2014! A two-year increase of 28%!
So you’d think we’d get some results for all this moolah. But no.
Life expectancy in the US, at 78.7 years at birth, ranks between 34th and 52nd place globally, depending on who does the counting, wedged somewhere between Bahrain and Cuba, and about 5 years below the top. Among US states, life expectancy ranges from 81.3 years in Hawaii or 80.8 years in California to 74.9 years in Mississippi. It’s bad. But we handed Big Pharma a ballooning amount of money to get there.
This $424.8 billion in prescription drug spending at “invoice pricing” isn’t based on what Americans or their health insurers pay. According to IMS Health, which released the report, it reflects invoice pricing by drug companies to distributors. It includes neither price concessions by drug companies nor the “mark-ups and additional costs” before these drugs get to patients.
Another metric is “net price spending.” It’s based on the same wholesale prices but after “rebates, off-invoice discounts, and other price concessions made by manufacturers to distributors, health plans, and intermediaries.” And it jumped by 8.5% to $309.5 billion.
And then there’s what IMS Health calls “average patient cost exposure,” which is what Americans pay, including copays and deductibles. We’ll get to that in a moment.