Prescription drug spending has become increasingly concentrated on highly novel medicines over the last decade, driven by greater prescribing rather than higher prices, according to a study published Aug. 3 in Health Affairs.
Researchers at the USC Schaeffer Center for Health Policy & Economics analyzed 20 years of data on about 600 newly approved small-molecule drugs. Here are five key findings:
- Around 2013, revenues for highly novel drugs began growing substantially faster than those for less innovative products.
- Average gross revenues for drugs with highly unique therapeutic targets increased from $400 million to $1.6 billion by the end of the decade.
- The revenue gap between highly novel and less novel drugs largely persisted after accounting for estimated manufacturer rebates.
- Prescriptions for highly innovative drugs increased while prescribing of less novel drugs declined, suggesting spending growth was driven primarily by greater use rather than higher prices.
- Researchers said pharmacy benefit managers’ increasing use of restrictive formularies may have contributed to the shift by favoring coverage of more novel therapies over drugs with multiple similar alternatives.
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