Health Spending Grows 3.4%, Rx Drug Spending Jumps 8.2%

October 29, 2015

By California Healthline

Total health care spending among U.S. residents with employer-sponsored health plans grew slightly in 2014, according to a Health Care Cost Institute report released Thursday, Modern Healthcare reports.

Meanwhile, spending on prescription drugs among individuals with such plans climbed significantly, in large part because of high-priced hepatitis C treatments (Herman, Modern Healthcare, 10/29).

Harvoni, a first-of-its-kind hepatitis C treatment that requires patients to take just one pill daily, costs $94,500 per patient. Sovaldi, a "breakthrough therapy" considered to be a substantial improvement over other similar treatments on the market at the time, costs $84,000 per patient, for a 12-week regimen (California Healthline, 3/30).

Report Details

For the report, HCCI examined claims data from multiple large commercial insurers, which covered more than 25% of the 150 million privately insured U.S. residents.

According to the report, spending on drugs, hospitals and physicians in 2014 increased by 3.4% overall, while spending on brand-name drugs increased by 8.2%. In comparison, overall health care spending increased by 3% in 2013 and by 3.3% in 2012.

The report attributed the spike in brand-name drug spending to use of Harvoni and Sovaldi, as well as a third drug for hepatitis C, Olysio. Still, the report noted that the number of prescriptions filled for the drugs among employer-sponsored health plans is low. Amanda Frost, senior researcher at HCCI, said, "Hepatitis C usage is quite low in comparison to the use of other drugs. But we saw a pretty sizable increase on brand price, and we can attribute a lot of that to these three drugs."

Frost also said the report showed an "ongoing trend of declining utilization" that has occurred since the country's latest economic recession. According to the report, out-of-pocket health care spending among privately insured individuals increased by 2.2% in 2014, with average annual out-of-pocket expenditures reaching $810. Frost noted that the declining use of health care services, coupled with slight price increases, are the reason "health care spending growth look[s] steady."

View original article