Practical Analytic Approaches to Healthcare Challenges
Prescription drugs comprise the third-largest component of U.S. national health expenditures, behind only hospital care and physician services, according to the Centers for Medicare and Medicaid Services.[i] According to the QuintilesIMS Institute, invoiced sales of prescription drugs amounted to $450 billion in 2016, representing 13.4 percent of all U.S. health spending. Prices for prescription drugs in the U.S. are far higher than they are in other industrialized countries. In 2014, on an invoice price basis, the U.S. spent $1,327 per capita on prescription drugs, as compared to non-U.S. members of the Organisation for Economic Co-operation and Development, which had a median per capita drug spending of $489.[ii]
Generic drugs represent an effective and affordable method to decrease pharmacy costs. Generic drugs have saved the U.S. healthcare system $1.67 trillion in the last decade, generating $253 billion in savings in 2016 alone.[iii]
To explore the extent of generic drug usage in pharmacy prescriptions we conducted a focused analysis using drug categories in one of MedInsight’s client databases. Key findings of this analysis were:
- The proportion of generic prescriptions dispensed has increased consistently over the last 7 years, accounting for 89% of total prescription events in 2016.
- Generic prescriptions account for only 27% of total prescription costs.
- Branded drug prescription events decreased by 48% between 2010 to 2016,
- Branded spending increased by 42% over that same period.
Our observations were based on our analysis of a single customer’s data, however the results are in line with the analysis presented by the Generic Pharmaceutical Association (GPhA) for 2015.[iv]
We further analyzed the prescription events and prescription costs for the top 5 drug categories in terms of total cost in the year 2016. The key observations were:
- All five categories were found to be directly or indirectly related to a chronic condition.
- In four out of five categories, the generic prescription rate was greater than 50%.
- The exception was anti-asthmatic drugs. These were prescribed largely in the form of branded drugs (78%) with a generic prescription rate of only 22% percent.
- More than 90% of the total prescription costs were attributable to branded drugs in all top five drug categories.
The analysis confirmed market perception and published trend of increasing generic prescription rates despite the bulk of pharmacy expense still driven by the expensive branded drugs.
[i] Centers for Medicare and Medicaid Services. National Health Expenditures 2015 Highlights. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf
[ii] Avik Roy,2017. A Market-Based Plan for Affordable Prescription Drugs. Available at: https://freopp.org/a-market-based-plan-for-affordable-prescription-drugs-931e31024e08[iii] Association for Accessible Medicines. 2017 Generic Drug Access and Savings in the U.S. Report. Available at: https://www.accessiblemeds.org/resources/blog/2017-generic-drug-access-and-savings-us-report
[iv] Generic Pharmaceutical Association, 2015. Generic Drug Savings In The U.S. Seventh Annual Edition:2015. Available at: http://www.gphaonline.org/media/wysiwyg/PDF/GPhA_Savings_Report_2015.pdf