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Originally published Wednesday, April 4, 2012 at 8:29 AM

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US prescription spending again nearly flat

Spending on prescription drugs in the U.S. was nearly flat in 2011 at $320 billion, held down by senior citizens and others reducing use of medicines and other health care and by greater use of cheaper generic pills.

AP Business Writer

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TRENTON, N.J. —

Spending on prescription drugs in the U.S. was nearly flat in 2011 at $320 billion, held down by senior citizens and others reducing use of medicines and other health care and by greater use of cheaper generic pills.

Last year, spending on prescription drugs rose just 0.5 percent after adjusting for inflation and population growth, according to data firm IMS Health. Without those adjustments, spending increased 3.7 percent last year. The volume of prescriptions filled fell about 1 percent.

That continues a trend of restrained spending that began in 2007, when prescription spending dipped 0.2 percent. Before then, IMS generally reported annual spending increases of several percent. But since the Great Recession started, prescription spending has fallen or risen only slightly each year except for 2009.

IMS said Wednesday that it appears patients are still rationing their health care, with visits to doctors down 4.7 percent and hospital admissions down 0.1 percent. However, emergency room visits jumped 7.4 percent, a sign some people aren't seeking care until they are very sick.

"We think we've reached a tipping point, where people are thinking they're paying too much and they're changing their behavior" and getting less treatment, said Michael Kleinrock, head of research development at the IMS Institute for Healthcare Informatics.

Fewer visits to doctors and other health care providers results in fewer prescriptions getting filled, which holds down spending in the short term. But that doesn't bode well for future health care costs, because many of the medicines people are doing without are taken for years to prevent heart attacks and other expensive complications of chronic conditions such as heart disease and diabetes, Kleinrock said.

"The ultimate result is that we will have more sick people driving health care costs" down the road, he said.

People aged 65 and older cut back on the number of prescriptions filled by 3.1 percent last year, particularly for medicines for high blood pressure. That was despite a 10 percent decline in average prescription co-payments under the Medicare Part D program, to $23.31, due to bigger discounts when patients hit the so-called doughnut hole coverage gap.

Only one group increased prescription use last year. People aged 19 to 25, now able to stay on their parents' health insurance plans under a provision of the Patient Protection and Affordable Care Act, boosted their use of prescription medicines by 2 percent. That was led by more use of antidepressants and attention deficit disorder drugs.

Kleinrock noted the company's data indicate both people with and without insurance are having trouble paying for medicines and other health care, and so are limiting or postponing treatments. For instance, insured patients spent $1.8 billion less out of pocket last year, at a total of $49 billion.

Meanwhile, use of inexpensive generic medicines continues to climb, hitting 80 percent of all prescriptions filled last year. That growth is fueled both by patients trying to save money and by the start of an avalanche of blockbuster medicines, many for chronic conditions, losing patent protection.

Cholesterol fighter Lipitor, the top-selling drug in history with a $13 billion-a-year peak, got its first U.S. generic competition on Nov. 30. This year, generic competition arrives for drugs taken by millions of people for high blood pressure, diabetes, asthma and allergies, depression, schizophrenia and prevention of blood clots that can cause heart attacks and strokes.

The institute's annual report shows patient restraint and increased use of generics are offsetting factors that usually push up spending on prescriptions significantly, particularly use of pricey, newly approved medications.

Last year, 34 new prescription medications were launched in the U.S., the most in a decade. They brought significantly better treatments to more than 20 million Americans with life-threatening conditions, including cancer, hepatitis C, heart disease and multiple sclerosis. But the new drugs carry big price tags, with most costing tens of thousands of dollars for a year or a course of treatment.

Prescription drug revenue also was boosted by price increases for existing medications and by the newly insured young adults.

In an interview, Kleinrock said he doesn't see the current trends changing anytime soon. Given that, he expects prescription sales to be flat or up 1 percent in 2012, and to decline as much as 2 percent after adjusting for inflation and population growth.

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Linda A. Johnson can be followed at http://twitter.com/LindaJ-onPharma

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