Has The Era Of Slow Growth For Prescription Drug Spending Ended?
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Author(s)
Aitken, M.
Cutler, D.
Kleinrock, M.
Maini, L.
Berndt, Ernst R
Date Issued
September 2016
Journal
Health Affairs
Publisher
Project Hope
Citation
Aitken, M.; Berndt, E. R.; Cutler, D.; Kleinrock, M. and Maini, L. “Has The Era Of Slow Growth For Prescription Drug Spending Ended?” Health Affairs 35, no. 9 (September 2016): 1595–1603.
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Author's final manuscript
Abstract
In the period 2005–13 the US prescription drug market grew at an average annual pace of only 1.8 percent in real terms on an invoice price basis (that is, in constant dollars and before manufacturers’ rebates and discounts). But the growth rate increased dramatically in 2014, when the market expanded by 11.5 percent—which raised questions about future trends. We determined the impact of manufacturers’ rebates and discounts on prices and identified the underlying factors likely to influence prescription spending over the next decade. These include a strengthening of the innovation pipeline; consolidation among buyers such as wholesalers, pharmacy benefit managers, and health insurers; and reduced incidence of patent expirations, which means that fewer less costly generic drug substitutes will enter the market than in the recent past. While various forecasts indicate that pharmaceutical spending growth will moderate from its 2014 level, the business tension between buyers and sellers could play out in many different ways. This suggests that future spending trends remain highly uncertain.
MIT Department
Sloan School of Management
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DOI of Published Version
https://doi.org/10.1377/hlthaff.2015.1636
