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January 31, 2024
David Burda
Economics Innovation System Dynamics

Another Lesson in Drugs, Drug Prices and Drug Spending

It’s that time of year again when I try to educate myself on drugs, drug prices and drug spending. I limit my classes to one day a year lest I get sucked down the rabbit hole of covering big pharma and turn into a one-trick healthcare business journalist pony, murmuring about million-dollar pills in my sleep.

My textbooks are the IQVIA Institute’s annual Global Use of Medicines report and CMS’ annual report on national health expenditures (NHE). IQVIA released the 2024 report earlier this month. CMS released its latest report on historic NHE in December.

Let’s start with a few factoids from CMS, shall we?

  • National health spending on prescription drugs rose 8.4% in 2022 to $405.9 billion.
  • That’s the highest annual increase in prescription drug spending since 2014, when spending on drugs rose 12.1%.
  • Spending on prescription drugs represented 9.1% of total NHE in 2022. By comparison, spending on hospital care and physician and clinical services was 30.4% and 19.8% of NHE in 2022, respectively.
  • Patients’ out-of-pocket spending on prescription drugs jumped 11.6% in 2022 to $56.7 billion. That’s the highest annual increase in consumer out-of-pocket drug spending since 2002, when consumer spending on drugs rocketed 20.4%.
  • Medicare and Medicaid spending on prescription drugs rose 9.4% and 14.2%, respectively, in 2022.

And a few factoids from the IQVIA report:

  • The number of defined daily doses (DDD) of prescription drugs was unchanged in North America in 2023 at 290 billion compared with 2022. That’s projected to grow just 1.4% this year to 294 DDDs.
  • The number of global adult vaccinations dropped more than 12% to 351 million in 2022 from a peak of 400 million in 2020. That figure includes vaccines for influenza, herpes zoster, diphtheria, tetanus, pertussis, pneumonia and hepatitis B.
  • Invoice, or gross sales, of prescription drugs in the U.S. rose 10.2% to $711 billion compared with 2022. Net sales rose 8% to $446 billion.
  • The loss of exclusivity, i.e., patent protection, cost drug manufacturers $17.6 billion in lost invoice sales in the U.S.
  • Global spending on obesity drugs, i.e., GLP-1 drugs, reached $24 billion last year, up from $3.2 billion in 2020. Global spending on obesity drugs will hit $74 billion by 2028 with a compound annual growth rate of 24%-27%.

Now you know what I know. And that’s five years from now, the healthcare system will have to deal with lots of poor, skinny old people who have the flu or pneumonia.

Thanks for reading.

To learn more about what I didn’t know about drugs and drug prices, please read:

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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