CMS Finds Prescription Drug Spending Growth Drops Dramatically

Dec 12, 2017

In state legislatures and homes across the country, heated debate continues about what to do about high prescription drug prices. So far, this has resulted in many complicated and unnecessary drug pricing bills passing in states from California to Maryland with more, similar bills expected to be considered in 2018, including in Massachusetts. However, the most recent federal data does not show a need for such legislation for one simple reason: nationally, prescription drugs were the smallest contributor to rising healthcare costs in 2016.

The Centers for Medicare & Medicaid Services (CMS) just released new data on national health expenditures in 2016, which found prescription drug spending had the slowest growth of any healthcare sector in 2016. In comparison to overall health care spending, which increased 4.3% in 2016, prescription drug spending increased just 1.3%. And overall it still represents about 10% of overall national healthcare expenditures – a figure that’s remained consistent for decades. According to CMS, prescription drug spending decelerated partly due to “slower growth in brand-name drug spending” and a “decline in spending for generic drugs as price growth slowed.” And that’s without any government intervention.

CMS breaks down spending growth for each major segment, which puts these numbers in perspective:

  • Spending for hospital care increased 4.7% to $1.1 trillion in 2016, representing 32% of all healthcare expenditures;
  • Spending on physician and clinical services increased 5.4% to $664.9 billion in 2016, representing 20% of all healthcare expenditures;

The FDA and the biopharma industry are working hard to come up with innovative ways to lower costs and ensure patient access without stifling innovation – and it’s working. MassBio applauds their efforts.

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