IQVIA has released their 2022 Report on the Use of Medicines and as usual it is jam packed with great information. Three key things you should know:
- Prescription drug expenses are continuing to rise at a very significant rate.
- Specialty pharmaceuticals now comprise over 50% of the U.S. drug spend .
- Prescription abandonment is an important yet “hidden” problem.
Additional data and trends include:
- Retail drugs currently represent 86% of medicine use in the U.S. and non-retail drugs are only 14% of use, a number that has been declining since 2017. These statistics are very consistent with what we see in our practice. For our 60 largest IDNs, health systems and hospital clients, outpatient drug spend now exceeds inpatient drug expense. This situation emphasizes the need for an overall pharmacy strategy that looks beyond pharmacy as a “cost center” and recognizes the significant contribution to revenue and operating margin that well-run retail, specialty and infusion programs can generate. It also emphasizes the growing importance of ambulatory pharmacy patient care services to assure patients are on the right drugs, off the wrong ones, and adherent to their regimens to prevent costly drug related hospital admissions.
- In total, dispensed prescriptions increased at an average 2.1% over the past five years with minimal impacts due to the pandemic. Prescription growth has been driven by the aging population as seniors use more medicines per capita than other age groups, and the 65+ population has grown on average 3.6% annually 2017- 2021. In our experience, each senior typically has at least one chronic condition and each chronic condition generates on average of two prescriptions. Projections are that by 2030, fully 30% of the U.S. population will be classified as seniors. This trend certainly points toward continued growth in the retail prescription market and the need for health systems to have a coordinated strategy around retail/specialty pharmacy and population health/disease management programs.
- While the percent of prescriptions distributed at retail pharmacies has grown 12% since 2017, mail order prescriptions have declined 4% despite a slight increase in 2020 due to shifts to mail order. The emergence of major players in the mail order prescription space, like Amazon, were expected to create some significant market shifts. However, as evidenced by these data, those shifts have failed to materialize. As a result, there is a continuing opportunity for hospital-based retail/specialty programs. With the increased need for chronic conditions management, hospital-based programs are in a great position to be able to provide fully integrated, longitudinal care for these patients which includes their prescription needs. Being able to fill retail/specialty prescriptions through hospital-based programs provides access to key medication-related data that is vital to an overall patient management approach.
- Specialty medicines now account for 56% of spending, up from 28% in 2011 and driven by growth in autoimmune, oncology and diabetes use. While specialty medicines now account for the majority of the prescription drug spend, they still represent less than 5% of total prescription volume. These data highlight the need for a robust hospital strategy around specialty medications that can help control expense on the inpatient side and optimize revenue/margin on the outpatient side. Understanding growth trends in populations that rely on specialty medications, and keeping ahead of the release of new specialty agents, is imperative for overall hospital success as this class of medications continues to grow.
- Reflecting the growing number of people seeking care for mental health disorders in the U.S , prescriptions for mental health disorders grew 5.5% in 2021 and 7.6% in 2020, an increase of more than 64Mn prescriptions in two years. Providing care for this rapidly growing segment remains a challenge for many organizations, but these data point toward continuing growth in this market segment.
- Drugs remain one of the fastest growing elements of U.S. healthcare spending. Over the past five years, spending at list prices [Wholesaler Acquisition Cost (WAC)] has increased from $581Bn to $776Bn — an average of 5.9% per year. Payer net spending has increased from $463Bn to $586Bn over five years at a compound annual growth rate of 4.8%. Spending at manufacturer net prices, including all products, are estimated to have grown an average of 4.6% over five years and 12.1% from 2020 to 2021, including $26Bn of growth from COVID-19 vaccines and therapeutics. In our experience, hospital and health systems are often under resourced in terms of business infrastructure, supply chain management and analytics to most effectively track and manage this growing expense. As hospital margins continue to be squeezed, investing in the infrastructure to optimize the management of pharmaceuticals continues to make good business sense.
- In 2021, use of opioids declined by 6.9%, dropping back to per capita levels of use seen in the middle of the year 2000. While this is great progress, the issue of opioid related deaths is far from controlled. Data from CDC’s National Center for Health Statistics indicate that there were an estimated 100,306 drug overdose deaths in the United States during 12-month period ending in April 2021, an increase of 28.5% from the 78,056 deaths during the same period the year before. Clearly this issue involves more than just controlling prescription opioid use and given the primary focus on the pandemic the past two years organizations should not lose sight of the continuing need to improve in this area.
- 81Mn new prescriptions were abandoned at the pharmacy in 2021 by patients. Of prescriptions with a final cost above $250, 61% are not picked up by patients, as compared with 7% of patients who do not fill when the cost is less than $10. When examining causes for 30-day readmissions failure to take prescribed medication is often a major driver of readmission with several studies showing this to be 25-30% of the total readmission volume. Ensuring an effective discharge medication reconciliation and discharge prescription capture program supported by a well-developed patient medication assistance program are sound strategies to address this opportunity.
While these are just a few of the key data points from the IQVIA report, they do highlight the continued importance of medications for effective outcome, expense and revenue management for hospitals and health system. Having a high-performance pharmacy system in place to optimize all aspects of medication use is critical and will continue to increase in importance as part of an overall strategy for hospital and health system success.