Decomposing changes in the growth of U.S. prescription drug use and expenditures, 1999‐2016

Abstract

Objective To analyze factors associated with changes in prescription drug use and expenditures in the United States from 1999 to 2016, a period of rapid growth, deceleration, and resumed above‐average growth. Data Sources/Study Setting The Medical Expenditure Panel Survey (MEPS), containing household and pharmacy information on over five million prescription drug fills. Study Design We use nonparametric decomposition to analyze drug use, average payment per fill, and per capita expenditure, tracking the contributions over time of socioeconomic characteristics, health status and treated conditions, insurance coverage, and market factors surrounding the patent cycle. Data Collection/Extraction Methods Medical Expenditure Panel Survey data were combined with information on drug approval dates and patent status. Principal Findings Per capita utilization increased by nearly half during 1999‐2016, with changes in health status and treated conditions accounting for four‐fifths of the increase. In contrast, per capita expenditures more than doubled, with individual characteristics only explaining one‐third of the change. Other drivers of spending during this period include the changing pipeline of new drugs, drugs losing exclusivity, and changes in generic competition. Conclusions Long‐term trends in treated conditions were the fundamental drivers of medication use, whereas factors involving the patent cycle accelerated and decelerated spending growth relative to trends in use.

Explaining why increases in generic use outpace decreases in brand name medicine use in multisource markets and the role of regulation

“…We observe that the segment effects and the market structure effects are both sizeable and comparable. Previous approaches have identified large effects of changes in quantity of pharmaceuticals prescribed relative to changes in prices [ 6 , 58 ] and the potential roles of different segments on changes in overall expenditures [ 5 ]. We add to this approach by explicitly quantifying how much of the change in a certain segment is due to market structure and how much is due to segment effects.…”

“…Finally, as last element of patient structure, we considered dynamics in medicine use rates that may be due to changes in medical need [ 5 , 6 ]. Using the complete prescription data, we captured the number of patients in a therapeutic area at physician level.…”

“…While total prescription medicine use in Germany has increased from 28 billion to 40 billion defined daily doses (about 42 percent between 2005 and 2015), use of generic medicines has almost doubled from 16 billion to 33 billion doses in parallel leading to expenditures of 12.37 billion euros considering gross prices (or, 11.34 billion euros when excluding mandatory manufacturer and pharmacy rebates) in 2015 [ 1 , 3 ]. Countries like the United States have observed quantity increases at similar scale [ 4 , 5 ].…”

“…Previous studies have quantified the role of changes in prices, quantities, technological progress or substitution effects in the evolution of pharmaceutical expenditure and pharmaceutical price inflation [5][6][7]. We expand this literature by considering physician prescribing to uncover the extent to which the dynamics in use of medicines across segments is driven by physician perceptions and unobserved factors compared to market structure.…”

Trajectories of prices in generic drug markets: what can we infer from looking at trajectories rather than average prices?

“…Since the enactment of the Hatch-Waxman Act, generic drugs have become increasingly important for consumers' access to low cost medication [26]. Today, millions of consumers rely on low-price generic drugs for treating a wide range of conditions and in fact nearly 90% of prescriptions dispensed are now generics [7,16].…”