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Medicine spending rose to $320 billion last year

By Lewis Krauskopf

(Reuters) - A raft of new medicines pushed spending on drugs modestly higher last year, but the gains were curbed by weak prescription use as Americans avoided doctor visits, according to a report released on Wednesday.

Overall U.S. spending on medicines reached $320 billion in 2011, up 3.7 percent from 2010, according to the report from IMS Health, a healthcare information and services company. The increase was just 0.5 percent on a per capita basis.

Prescription use fell 1.1 percent nationally on a per capita basis, the report said. Patient office visits declined by 4.7 percent overall.

"This is a continued effect of the last five years of economic challenges and the continuing pressure by shifting costs in terms of rising insurance premiums, rising co-pays both for visits and for medicines," said Michael Kleinrock, director of research development for the IMS Institute of Healthcare Informatics.

"We've reached a tipping point where patients will actually take that increased cost and use less medicine," Kleinrock said.

The elderly, in particular, used fewer medicines last year. Prescriptions for Americans 65 and older fell 3.1 percent on a per capita basis, according to the report. The largest reduction among seniors was for medicines to control high blood pressure.

"What they have done appears to be rationing their care," Kleinrock said of seniors.

Conversely, use of prescription drugs among young adults, ages 19 to 25, rose 2 percent -- the only age group that increased drug use in 2011. Increases were concentrated in therapies for depression and attention deficit hyperactivity disorder.

The report said the increased medicine use among young adults coincided with new regulations in the U.S. healthcare overhaul law, which allows young adults to stay on their parents' insurance plans until age 26.

The tepid overall rise in medicine use in 2011 came as the pharmaceutical industry launched new drugs that stand to change the way conditions such as hepatitis C, stroke and skin cancer are addressed.

All told, the industry launched 34 new drugs last year, the most in more than a decade, according to IMS.

The new products include hepatitis C drugs Incivek from Vertex Pharmaceuticals and Victrelis from Merck & Co; Bristol-Myers Squibb's Yervoy and Roche Holding AG's and Zelboraf for melanoma; and two medicines for preventing stroke for patients with irregular heart beats: Boehringer Ingelheim's Pradaxa, and Xarelto from Johnson & Johnson and Bayer AG.

Spending last year on brands launched in 2010 and 2011 amounted to $12.2 billion, according to IMS.

Overall spending on brand-name medicines rose 2.2 percent to about $235 billion. Such spending was reduced by $14.9 billion because of brand-name products that lost their patent protection and saw their sales eroded by lower-cost generic copies. That included Pfizer's blockbuster cholesterol fighter Lipitor, which lost patent protection in late November.

Generics now account for about 80 percent of dispensed prescriptions, according to IMS. The pharmaceutical industry is in the midst of an unprecedented period in which many of the best-selling medicines are due to lose U.S. patent protection over the next couple years.

(Reporting By Lewis Krauskopf; editing by John Wallace)

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