IQVIA reports medicine spending rose in 2022 due to COVID vaccines, therapies

The U.S. health system exhibited strong growth in medicine use and spending in 2022, while how patients engage with the health system and medicine utilization has shifted, according to a new U.S. Medicines Trends 2023 Report released by the IQVIA Institute for Human Data Science.

The report also noted that the complex nature of how medicines are paid for and the changing policy environment raises essential questions about medicine spending and patient out-of-pocket costs in the coming years. 

[Read more: IQVIA report: U.S. health system is recovering from pandemic]

Key findings:

Health services utilization:

• The IQVIA Health Services Utilization Index—which tracks patients visits, screening and diagnostic tests, elective procedures and new prescriptions—has recovered to 100% of pre-COVID-19 levels in Q4 2022 while utilization has shifted in key indicators, with increased visits and new prescriptions but decreased elective procedures and screening and diagnostic tests.
• Telehealth visits have fallen to 5% of total visits in 2022, down from the peak of 26% seen early during the pandemic, but much higher than the pre-pandemic level of <1% and suggesting a fundamental shift in healthcare delivery.
• Acute new prescriptions were elevated late in 2022 due to the severe respiratory illness season, including increased levels of flu, COVID-19 and respiratory syncytial virus circulating in the United States.
• The current flu season peaked earlier than prior years and cases were 14% higher than the three-season average through early March. Due to increased concern over the impact of flu, flu vaccinations remain 20% above historical levels. Other pediatric vaccinations remain below pre-pandemic levels while adult vaccinations have returned to normal, with shifts in the types of vaccines received and the setting where vaccines are administered.

Read more: IQVIA reports medicine spending rose in 2021 due to COVID-19 vaccines, therapies]

Medicine use:

• Medicine use] reached 242.6 billion days of therapy in 2022, growing 2.6%.
• Biosimilars have provided increased patient access to medicines, accounting for 25% of the total molecules volume with biosimilars on the market. However, there is wide variation in uptake across molecules, reflecting differences in strategies adopted by originator and biosimilar manufacturers, payer and PBM decisions, as well as clinician and patient preferences. 
• In retail drug usage, dispensed prescriptions reached 6.7 billion in 2022, with growth at 3.6% exceeding pre-pandemic levels. Within this growth are notable areas of utilization in 2022, including ADHD medicines, mental health prescriptions for girls under 19, antibacterials and newer diabetes therapies also used to treat obesity.
• Lower levels of utilization were recorded in 2022 for prescription opioids—where levels are now lower than in 2000 – and long-acting birth control.

Medicine spending and growth drivers:

• Spending on medicines—at net manufacturer prices—reached $429 billion in 2022, growing 5.3%, including the continued contribution of COVID-19 vaccines and therapeutics. Spending at list prices grew at 7.4% over the past five years, but payers’ spending grew at 4.5% and patients’ costs grew at 1.4%. Spending at list prices has increased faster than all-payer net spending but far slower than 340B institutions, as negotiated discounts and rebates to payers and providers increase in competitive markets and 340B organizations account for a larger share of medicine use.
• Spending on medicines—at net manufacturer prices—reached $429 billion in 2022, growing 5.3% including the continued contribution of COVID-19 vaccines and therapeutics.
• Specialty medicines now account for 51% of spending, up from 32% in 2012, driven by growth in immunology and oncology, though the contributions of COVID-19 vaccines and oral therapeutics have lifted the share of spending on traditional medicines in the last two years.
• Total drug spending at estimated net manufacturer prices increased by $103 billion over the past five years, primarily driven by new products and brand volume. Immunology, oncology, COVID-19 and diabetes have driven volume growth. Losses of exclusivity for biologics and the introduction of biosimilars have increased dramatically in the past three years, offsetting increased spending on new products, with brand sales of those products dropping by $33 billion over the past five years compared to $4 billion over the prior five years and reflecting a growing role for biosimilars. Increases in list prices of protected brands fell to a low of 3.7% in 2022, while net prices were unchanged on average, marking the fifth consecutive year with net price increases of less than 1%.

Patient out-of-pocket costs:

• Patient out-of-pocket costs rose $3b billion in 2022 to $82 billion and remain a significant burden for a relatively small part of the population even as average costs per prescription are flat or declining. Without the nearly $19 billion in manufacturer copay assistance in 2022, out-of-pocket costs would have exceeded $100 billion. Medicare aggregate out-of-pocket costs have risen over the past five years, with population and volume increases accounting for most of the increase offset by price reductions.
• Overall, 7% of patients reach annual out-of-pocket costs above $500 compared to 15% in Medicare, with commercially insured patients having lower costs due to benefit designs and use of co-pay coupons or vouchers.
• Annual out-of-pocket caps in Medicare Part D passed in the Inflation Reduction Act could save 1 million patients $1,700 on average. Due in part to high costs, patients starting new therapy abandoned 94 million prescriptions at pharmacies in 2022 with increasing frequency as out-of-pocket costs rise and abandonment of over 40% for prescriptions over $125.
• Insulin costs continue to decline but patient payments above $35 are more common for these drugs than in the overall market. Over 20% of insulin prescriptions carry an out-of-pocket cost above $35 and with policy changes under the Inflation Reduction Act and manufacturer price reductions, patients could have saved $561 million in 2022 with costs capped at $35.

Outlook to 2027:

• Use and spending on medicines in the U.S. will return to pre-pandemic growth projections by 2024, but new pressures on net growth from new pricing policies will impact later years. Spending on medicines is forecast to be unchanged over the next five years with growth expected between -2 to 1%, remaining similar to current levels of spending at $429 billion. This outlook reflects structural market dynamics, complex usage patterns, and competition, as well as the effects of new policies and legislation.
• Over 250 new drugs are expected to launch within the next five years and contribute over $100 billion in new spending. Policy changes, competition between manufacturers and payer pressure are expected to ensure net prices of protected brands decline over the next five years and list price growth remains low.
• Biosimilar introductions and uptake are expected to save the U.S. healthcare system over $180 billion over the next five years, though uncertainties remain around pricing and uptake.
• Oncology, neurology, and obesity will drive the most growth in spending during the forecast period, and next-generation biotherapeutics may reach $12 billion in annual sales by 2027, though significant scientific and commercial uncertainty exists in this fast-evolving area.