The Current State of the Healthcare Industry’s Usage and Spending Trends

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Due to the COVID-19 pandemic, the healthcare market had to adjust accordingly to accommodate the shift in use of health services and medications, along with therapeutics and vaccines.

Now, with the United States officially ending the public health emergency on May 11, 2023, new trends have come to light for 2024. With the help of evidence-based research, IQVIA has released its annual report on medicine spending trends in the United States—known as “The Use of Medicines in the US 2024: Usage and Spending Trends and Outlook to 2028”—which addresses new areas of focus, including Inflation Reduction Act (IRA) implementation and obesity treatments.¹

The authors of the analysis prefaced it by noting that “the US market at net prices grew to $435 billion in 2023, an increase of 9.9% when the decline in COVID-19 vaccines and therapeutics is excluded. This represents a significant acceleration in spending growth driven by innovation and a shift in the mix of use of older medicines that is bringing better medicines to more patients. Spending growth including COVID-19 vaccines and therapeutics slowed to 2.5% as the market for these medicines fell sharply in 2023.”

As a result, these data must be taken with a grain of salt if one chooses to include COVID vaccines and other therapeutics as part of their analysis.

In regard to the IRA, numbers are showing that the legislation is beginning to have an indirect effect on drug prices at the very least. Last year, the increase in list price was found to slow a bit to 4.9%, and through 2028, is predicted to average a jump of approximately 1%–4% per year.

At the same time, the authors also explained that “the next five years are expected to bring an increasing gap between list price spending, which will grow at 6–9%, and manufacturer net revenues, which will grow at 4–7%, including the expected impacts of price negotiation and other aspects of the Inflation Reduction Act.”

As a result, it makes sense that new brand spending in the next five-year period is expected to decrease from $149 billion to $122 billion.

Obesity and oncology drugs have further propelled growth through 2028; COVID, immunology, and diabetes, on the other hand, have caused a slowdown. When it comes to meds to combat obesity, drug spending has risen over the past two years from novel drugs, such as GLP-1 inhibitors. If this drug class becomes more widely reimbursed, additional upside could be on the way. Speaking of which, the higher brand costs of these GLP-1 agonists were major drivers of the average out-of-pocket (OOP) cost per retail prescription rising last year, but luckily, patient OOP costs have remained below $20 for 90% of prescriptions.

In the case of diabetes, net spending looks to flatten out come 2028, given the fact that wider adoption of novel therapies will be cancelled out by list and net price cuts.

As for the growth of biosimilars—another major topic of coverage for Pharma Commerce—they have caused projected immunology spending growth to slow down to 2%–5% through 2028, but volume is expected to increase over this same time frame. And here’s an attention-grabbing statistic: spending surrounding cell and gene and RNA therapies, classified as “next-generation biotherapeutics,” are expected to reach $18 billion by 2028, equaling more than 3.5 times the current level.

Reference

1. Aitken M, Kleinrock M, Pritchett J. The Use of Medicines in the US. 2024: Usage and Spending Trends and Outlook to 2028. IQVIA Institute for Human Data Science. May 7 2024. https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/the-use-of-medicines-in-the-us-2024/the-use-of-medicines-in-the-us-2024-usage-and-spending-trends-and-outlook-to-2028.pdf