It probably won’t surprise anyone that Covid-19 has driven up US drug spending. Now we can give it an actual number. According to IQVIA, drug spending reached $407 billion in 2021, a 12% increase from the previous year.
At the same time, the market for non-Covid drugs also grew, but more modestly. The 5% growth in spending on these drugs was tempered by the impact of biosimilars, which are increasingly offsetting the use of branded biologics. The figures come from the US Medicines Trends 2022 report recently released by IQVIA. IQVIA, a Durham, NC-based life sciences clinical research and analysis company, produced the report independently without any government or industry funding.
Americans are taking more drugs overall, according to the report. Based on daily doses, IQVIA reports that drug use has increased by 9.6% over the past five years. The vast majority of these products are retail drugs, such as those dispensed by pharmacies. The drop in drugs used in non-retail settings such as hospitals mirrors the drop in elective procedures, according to the report. Fewer elective procedures also contributed to the plummeting volume of opioid prescriptions, continuing a trend dating back five years, the report said.
New drugs launched in the past two years drove drug spending of $46.4 billion in 2021, up from $18.8 billion the previous year. Covid-19 vaccines and therapies accounted for $29 billion in spending in 2021, down from $3 billion in 2020. Without new Covid-19 products, spending on new drugs would have tended to decline, according to the report.
Not all news about vaccination during the pandemic was good. IQVIA has more than 7 million missed pediatric vaccines since March 2020. Adult vaccinations in 2020 remained close to pre-pandemic levels due to an increase in pneumococcal vaccines and increased slightly in 2021. But IQVIA added that this increase has not kept pace with population growth among the elderly, a demographic group that needs these vaccines. Flu shots, however, increased and remained well above pre-pandemic levels last winter due to fears that flu and Covid together could lead to a severe respiratory virus season.
The pandemic has led many people to postpone or cancel medical care. By the end of 2021, health service utilization had returned to pre-pandemic levels, although there was still a backlog of missed patient visits, screenings, IQVIA said. Elective procedures and new prescription starts also need to catch up.
Covid-19 led to an increase in prescriptions, but this growth was offset by a decline in new prescriptions, which were 20% below baseline during the pandemic and recovered to 5% below baseline in the first quarter of this year. The decline in drug use in long-term care facilities was likely due to increased mortality in these facilities due to the pandemic. Prescriptions in most therapeutic areas rebounded in 2021 following pandemic disruptions in 2020, according to the report.
Telehealth is another area of healthcare that has grown due to Covid-19. These visits represented less than 1% of visits before the pandemic, then increased to 15% of visits. In recent months, the use of telehealth has fallen to 4% of visits, according to the report.
Use of telehealth varied by health status. Mental health has seen a dramatic increase in the use of telehealth, which continues today. While chronic diseases such as hypertension, diabetes and HIV have also seen an increase in telehealth, the frequent blood work and testing required has led to a decline in the use of telehealth for these conditions.
While Covid-19 has had a significant impact on drug spending over the past two years, this effect will diminish in the years to come. The $29 billion spent on Covid vaccines and therapies will then fall to between $4 and $5 billion a year. Looking ahead, IQVIA predicts that immunology, oncology and neurology will continue to drive drug spending growth. These categories will be well represented in new drug brands to be launched over the next five years, as well as a significant number of rare disease treatments, according to the report.
Specialty drugs, many of which are biologics for complex conditions, are attracting more and more money in drug spending. These drugs accounted for 56% of drug spending, up from 28% in 2011, according to the report. This change is driven by the growth of specialty drugs for autoimmune diseases, oncology and diabetes.
According to IQVIA, more than 250 new drugs are expected to be launched over the next five years, contributing to more than $100 billion in new spending. The report says competition among drugmakers as well as pressure from payers is expected to keep brand-name drug prices stable or falling, as long as inflation is subdued. The introduction of biosimilars will reduce spending on biologic drugs by approximately $40 billion through 2026, an amount that is expected to exceed spending on generic small molecule drugs for the first time. Immunology, oncology and neurology will drive most of this growth, according to the report.
According to the report, of the 33 cell and gene therapies launched worldwide to date, only 18 are currently commercialized in the United States. IQVIA predicts that 55-65 new cell and gene therapies will be launched by 2026, and approximately 60% of these will be available in the United States. The growth of this segment of drug research is tempered by uncertainty regarding safety risks and the pace of clinical trials and regulatory reviews. Spending on these therapies has reached $3 billion and is expected to reach $11 billion by 2026. This spending could range from $7 billion to $20 billion, with the lower end of the projection reflecting more limited reimbursement due to risk-sharing agreements, a net price reduction or performance-based contracts.
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