Nominal Revenue for US Drug Sales Up 11.3% in 2021

The closely watched Use of Medicines in the U.S 2022 is out, from the IQVIA Institute for Human Data Science. Overall data show a double-digit increase in top-line (list price) revenue of 11.3% as well as a 13.3% increase in net revenue. A significant part of that is spending on Covid-19 vaccines and therapeutics ($29 billion), a category that was essentially nil in 2020. Separating out those expenditures, drug spending was up 5%.

Between the list prices and what payers spend lie the discounts, primarily to pharmacy benefit managers and for programs like the 340B program that discounts drug sales to certain hospitals. That discounting amounted to over $190 billion, representing an average 24% discount across all drug categories. However, there is considerable variation among drug classes: Diabetes drugs showed a weighted-average discount of 78% off list, while oncology drugs showed only a 7% discount.

Specialty pharmaceuticals now represent 55% of spending, which is actually down slightly from 2020. The crossover from traditional drug classes being the majority of spending occurred in 2018.

More broadly, IQVIA also produces a new “Health Services Utilization Index,” a measure of patient visits, procedures and new prescription starts. At the end of 2021, the Index was at 99, compared to a baseline of 100 in the first eight weeks of 2020. The Index had fallen to 66 in the second quarter of 2020 as the pandemic took hold. Overall, then, utilization rates have returned to something resembling “normal,” although IQVIA notes that there is now a significant backlog of unperformed healthcare activities. Notably, pediatric vaccinations are still running 20% lower than 2019 levels, “raising significant public health concerns about unvaccinated children” (this refers to all types of pediatric vaccinations, like those for measles or mumps, and not Covid-19 vaccines).

The report also tallies prescription activity: up 2.4% in 2021, to 6.474 billion. Average growth over the past five years has been 2.1%, but a significant dip occurred in 2020, with only 1.7% growth during the year, due to the pandemic.

Looking ahead, IQVIA predicts that market growth will return to pre-pandemic levels in 2023, with list-price growth of 2-5% CAGR during 2022-2026 and net CAGR of 1-4%. Spending on Covid-19 will drop to $4-5 billion per year after 2021. “Public pressure is likely to limit drug price increases to a greater degree than in the wider economy,” it predicts. Another significant factor is the entry of more biosimilars in the 2022-2024 period when products like ranibizumab (Lucentis), adalimumab (Humira) and ustekinumab (Stelara) will see biosimilar competition. As a category, biologics will suffer $40 billion in loss of exclusivity during 2022-2026.