Prescription Drug Spending Jumped to $374 Billion in 2014

By McCarton Ackerman 04/15/15

Antipsychotics and hep C treatments were some of the most profitable.

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Prescription drug spending has increased once again, jumping 13% last year to reach a staggering $374 billion.

Industry research firm IMS Institute for Healthcare Informatics provided the surprising data. Their findings showed that pricey new hepatitis C drugs accounted for over $11 billion of the spending, with a 12-week treatment of breakthrough treatment Sovaldi potentially costing more than $80,000 per patient. Perhaps due to the hefty price tag, Sovaldi became the top selling drug in its first year on the market.

Antipsychotic drug Abilify and rheumatoid arthritis treatment Humira were also among the most profitable prescription drugs last year. New drugs made up $20.3 billion of the overall prescription spending, while new brands and oral therapies for multiple sclerosis led to a 24.4% increase to $13.8 billion. Perhaps surprisingly, the millions of people newly insured under the Affordable Care Act led to a comparatively smaller $1 billion increase in spending.

Despite the huge increase in spending, those in the prescription drug industry itself aren’t expecting the boom to continue. Michael Kleinrock, director of research development for IMS Health, said he believes, “2014 is a bit of a one-off and we will see growth come down.”

But not all the drugs that have been purchased are actually used. A study released last February by the University of Chicago found that long-term care facilities in the U.S. waste $2 billion in unexpired medicines every year, while as much as $5 billion in medications across the country are tossed away annually.

Redistributing medications to other patients in need is out of the question because state and federal law forbid medical staff in nursing homes from giving one patient's pills to another, even if they have the same prescriptions. Even worse, these homes often create a bonfire for incinerating these medications.

Linda Johnston, the Tulsa County director of social services, created a drug donation program in response to this issue. Retired doctors collect the unused medications and have redistributed $16 million worth to date.

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McCarton Ackerman is a freelance writer and editor living in Portland, Oregon. He has been a contributor for The Fix since October 2011, writing on a wide range of topics ranging from medical marijuana in Colorado to the world's sexiest drug smugglers. Follow him on Linkedin and Twitter.