U.S. Medicines Spending Grew in 2023 as Greater Access Offset COVID-19-related Decline, Says IQVIA Institute

Rhea-AI Summary

Overall spending on medicines in the U.S. grew by 2.5% in 2023, reaching $435 billion. Excluding COVID-19 vaccines and therapeutics, the growth rate was 9.9%, driven by advances in oncology, immunology, diabetes, and obesity treatments. Patient out-of-pocket costs rose to $91 billion, influenced by wider use of GLP-1 agonists for diabetes and obesity. New prescriptions increased by 4%, while patient visits and diagnostics fell by 4-6%. The flu vaccination rate dropped by 17%. The IQVIA Health Services Utilization Index fell 3% to 97. The report projects continued growth in medicine spending, driven by innovation but tempered by patent expirations and the introduction of biosimilars. Net pharmaceutical spending is forecasted to grow at 4-7% annually through 2028, with oncology and obesity as primary growth drivers.

Positive

• U.S. medicines spending grew by 2.5%, reaching $435 billion in 2023.
• Excluding COVID-related treatments, spending grew by 9.9%, driven by innovations in oncology, immunology, diabetes, and obesity.
• New prescriptions increased by 4% in 2023.
• Total prescription medicine use rose by 4%, reaching 210 billion days of therapy.
• Retail prescriptions grew by 2.9% to 6.9 billion.
• High growth in therapy areas like GLP-1 agonists, immunology treatments, lipid regulators, and gastrointestinal medicines.
• Patient out-of-pocket costs increased to $91 billion in 2023.
• The report forecasts net pharmaceutical spending to grow at 4-7% annually through 2028.
• Next-generation biotherapeutics expected to reach $18 billion by 2028.

Negative

• Sharp decline in COVID-19 vaccines and therapeutics spending masked overall growth.
• Patient visits, diagnostics, and elective procedures fell by 4-6% in 2023.
• Flu vaccination rates dropped by 17% compared to 2022.
• The IQVIA Health Services Utilization Index declined by 3% to 97.
• Medicine spending growth is expected to be offset by notable patent expirations and biosimilar introductions.
• Despite rising list prices, uninsured patients faced higher out-of-pocket costs due to a smaller uninsured population.
• Only 1% of prescriptions exceeded $125, but that accounts for 71 million prescriptions.

Insights

Financial Analyst

Medicines spending in the U.S. saw a 2.5% increase in 2023, reaching $435Bn at net prices. This modest growth masks a more dynamic landscape when COVID-19 vaccines and therapeutics are excluded, showing a robust 9.9% growth. This discrepancy highlights a shifting focus towards innovative treatments in areas such as oncology, immunology, diabetes and obesity.

From an investor's viewpoint, this shift signifies a maturing market. Out-of-pocket costs for patients increased by $5Bn in 2023, reaching $91Bn. Copay assistance programs still play a significant role, indicating that patient affordability remains a important factor in the pharmaceutical industry.

Looking forward, the impact of price negotiation and elements of the Inflation Reduction Act will be substantial. Although list prices are expected to grow at 6-9%, manufacturer net revenues will likely grow at a slightly lower rate of 4-7%. This divergence suggests that while revenues are growing, they are doing so at a controlled pace, influenced by regulatory and competitive pressures.

For retail investors, the key takeaway is the long-term growth potential driven by innovation, particularly in oncology and obesity. However, the industry faces challenges from biosimilar introductions and notable patent expirations.

Market Research Analyst

The data reveals a 4% increase in new prescriptions, which reflects a resurgence in chronic and acute prescriptions. This trend is important for understanding future demand. Chronic prescriptions, often seen in diabetes and obesity treatments, are on the rise, indicating that long-term treatments are becoming more prevalent.

The IQVIA Health Services Utilization Index fell to 97 in 2023, down 3% from 2022, largely due to decreases in patient visits, screenings and elective procedures. This suggests that while new prescriptions are increasing, other healthcare services are still recovering from the pandemic's impact, which could slow overall industry growth.

The decline in flu vaccination rates by 17% and other routine vaccinations remaining below pre-pandemic levels also suggests a potential public health challenge that could impact future market dynamics.

Retail investors should note the increased usage of GLP-1 agonists for obesity and diabetes. These drugs are becoming more significant market drivers, especially considering their higher costs and emerging reimbursement patterns. The GIP/GLP-1 agonists category could be a key growth area, albeit with higher patient out-of-pocket expenses.

Medical Research Analyst

The report emphasizes significant advancements in oncology, immunology, diabetes and obesity. The sharp decline in COVID-19-related spending has been offset by these areas, suggesting a robust pipeline of innovative treatments. For instance, new classes of medicines such as GLP-1 agonists are now widely reimbursed for diabetes but less so for obesity, highlighting potential growth areas pending broader insurance coverage.

The increase in non-retail medicine use, primarily in clinics and doctor’s offices, points to a shift in treatment settings. This change can lead to improved patient outcomes due to better monitoring and adherence to treatment protocols, driving further demand for advanced therapies.

Additionally, the projected rise in next-generation biotherapeutics like cell and gene therapies underscores a transformative trend. These therapies, expected to reach $18Bn by 2028, represent the cutting-edge of medical innovation.

This information is vital for investors to understand the evolving landscape of treatment modalities and the potential for substantial market shifts towards personalized and highly effective therapies.

• Overall spending in the U.S. market for medicines grew 2.5% in 2023, reaching $435Bn at net price level, reflecting a sharp decline in COVID-19 vaccines and therapeutics
• Spending growth was 9.9% when COVID-19 vaccines and therapeutics are excluded, driven by innovation in areas such as oncology, immunology, diabetes, and obesity
• Patient out-of-pocket costs increased due to the increasing use of GIP/GLP-1 agonists, which are approved and widely reimbursed for diabetes but are less commonly covered for obesity
• The number of patient visits, diagnostics and elective procedures fell 4-6% in 2023, while new prescriptions rose 4%

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)-- Overall spending in the U.S. market for medicines grew by 2.5% and reached $435Bn in 2023. Excluding the contribution from COVID-19 vaccines and therapeutics, spending grew at 9.9%, according to a new report from the IQVIA^TM Institute for Human Data Science, The Use of Medicines in the U.S. 2024: Usage and Spending Trends and Outlook to 2028.

The drop in COVID-19 vaccines and therapeutics masks the significant growth in medicines that are bringing new clinical advances to larger patient populations in oncology, immunology, diabetes, and obesity.

“This is a story of two countervailing trends: A sharp decline in the use of COVID-19 vaccines and therapies, which is offset by a shifting usage pattern and a rapid acceleration in spending growth driven by innovation that is bringing more effective medicines to more patients,” said Murray Aitken, Executive Director of the IQVIA Institute for Human Data Science. “Over the next five years, we can expect continued growth in spending on medicines in the U.S. driven by innovation, but offset by notable expiration events and biosimilar introductions.”

Additional key highlights in the report include:

• Health services utilization: The IQVIA Health Services Utilization Index – developed to provide a composite view of multiple types of health services over time – tracks patient visits, screenings and diagnostic tests, elective procedures, new prescriptions and vaccinations. The Index fell to 97 for 2023, a decline of 3% from 2022, reflecting a 4-6% reduction across all indicators except for new prescriptions, which were up 4%. New prescriptions for chronic and acute conditions were both above pre-pandemic levels in 2023, reflecting continued growth of chronic prescriptions and a resurgence of seasonal respiratory ailments driving higher acute prescriptions. Flu vaccination rates fell by 17% from the 2022 level, and other routine adult and pediatric vaccination rates remain below pre-pandemic levels.
• Medicine use: In 2023, total prescription medicine use increased by 4% and reached 210 billion days of therapy. Non-retail medicine use, including a large portion of cancer treatment, was disrupted early in the pandemic but has seen a sharp rise, especially in clinics and doctors’ offices. Retail prescriptions reached 6.9 billion, a 2.9% increase from 2022 and down slightly from the prior year. Many therapy areas had high growth in days of therapy in 2023, including GLP-1 agonists in obesity and diabetes, immunology treatments, lipid regulators, and gastrointestinal medicines, all of which had increased use of more than 9% in 2023.
• Patient out-of-pocket costs: In aggregate, patient out-of-pocket costs reached $91Bn in 2023, an increase of $5Bn over the prior year. This amount is after $23Bn in copay assistance programs provided by manufacturers, with patients using copay cards for nearly one-third of brand commercial prescriptions in the top 10 therapy areas and 63% of obesity prescriptions. Both commercial and Medicare patients have seen drug out-of-pocket costs rise, while the amount paid by uninsured patients has declined due to a smaller uninsured population – even as rising list prices have exposed them to higher costs. More than 90% of prescriptions costed patients less than $20, but 1%, or 71 million prescriptions, exceeded $125.
• Medicine spending and growth drivers: The U.S. market at net prices grew to $435Bn in 2023. Spending at list prices has increased faster than all-payer net spending but far slower than the spending eligible for 340B discounts, which includes children’s hospitals, cancer and safety net hospitals, and which are entitled to purchase at the lowest prices in the market. Variations in growth at differing price levels highlight the complex interaction between list prices and the varied discounts applicable to different stakeholders. Total spending grew $10.4Bn in 2023, driven primarily by $19Bn in spending on new brands, a $22Bn impact on changes in the mix of medicines toward higher value medicines, and offset by a $28Bn decline in COVID-19 spending and $17Bn impact of expiries.
• Outlook to 2028: The U.S. spending forecast reflects continued growth driven by innovation, offset by notable expiry events. 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. Oncology and obesity will drive growth through 2028 while diabetes, immunology and COVID-19 will contribute to decline. Net spending on diabetes will be flat to 2028 as wider adoption of novel therapies is offset by both list and net price cuts. Immunology spending growth is expected to slow to 2-5% through 2028 from the impact of biosimilars, while volume increases 75% over the same period. Next-generation biotherapeutics – including cell and gene and RNA therapies – are expected to reach $18Bn by 2028, more than 3.5 times the current level.

About the IQVIA Institute for Human Data Science

The IQVIA Institute for Human Data Science contributes to the advancement of human health globally through timely research, insightful analysis and scientific expertise applied to granular non-identified patient-level data.

Fulfilling an essential need within healthcare, the Institute delivers objective, relevant insights and research that accelerate understanding and innovation critical to sound decision making and improved human outcomes. With access to IQVIA’s institutional knowledge, advanced analytics, technology and unparalleled data, the Institute works in tandem with a broad set of healthcare stakeholders to drive a research agenda focused on Human Data Science, including government agencies, academic institutions, the life sciences industry, and payers. More information about the IQVIA Institute can be found at www.IQVIAInstitute.org.

About IQVIA

IQVIA (NYSE:IQV) is a leading global provider of advanced analytics, technology solutions, and clinical research services to the life sciences industry. IQVIA creates intelligent connections across all aspects of healthcare through its analytics, transformative technology, big data resources, extensive domain expertise and network of partners. IQVIA Connected Intelligence™ delivers actionable insights and powerful solutions with speed and agility — enabling customers to accelerate the clinical development and commercialization of innovative medical treatments that improve healthcare outcomes for patients. With approximately 87,000 employees, IQVIA conducts operations in more than 100 countries.

IQVIA is a global leader in protecting individual patient privacy. The company uses a wide variety of privacy-enhancing technologies and safeguards to protect individual privacy while generating and analyzing information on a scale that helps healthcare stakeholders identify disease patterns and correlate with the precise treatment path and therapy needed for better outcomes. IQVIA’s insights and execution capabilities help biotech, medical device and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders tap into a deeper understanding of diseases, human behaviors and scientific advances, in an effort to advance their path toward cures. To learn more, visit www.iqvia.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240514329279/en/

Kerri Joseph, IQVIA Investor Relations (kerri.joseph@IQVIA.com)

+1.973.541.3558

Trent Brown, IQVIA Media Relations (trent.brown@iqvia.com)

+1.919.780.3221

Source: IQVIA

FAQ

What was the total spending on medicines in the U.S. in 2023?

The total spending on medicines in the U.S. in 2023 was $435 billion.

What was the growth rate of U.S. medicines spending in 2023 excluding COVID-19 treatments?

Excluding COVID-19 vaccines and therapeutics, the growth rate was 9.9%.

How much did patient out-of-pocket costs increase in 2023?

Patient out-of-pocket costs increased to $91 billion in 2023.

What was the increase in new prescriptions in 2023?

New prescriptions increased by 4% in 2023.

How did flu vaccination rates change in 2023 compared to 2022?

Flu vaccination rates dropped by 17% in 2023 compared to 2022.

What is the forecast for net pharmaceutical spending growth through 2028?

Net pharmaceutical spending is forecasted to grow at 4-7% annually through 2028.

What areas are expected to drive future medicine spending growth?

Oncology and obesity are expected to drive future medicine spending growth through 2028.

What was the IQVIA Health Services Utilization Index value for 2023?

The IQVIA Health Services Utilization Index value for 2023 was 97.