Prescription Drug Lifecycle Helps Health Care Spending Hit Record Low

Following several years of modest growth, a new study published in Health Affairs reports a record low health care spending increase of 3.6 percent in 2013. The last time the annual growth rate was any smaller, Dwight Eisenhower was President and a gallon of milk cost 49 cents. The year was 1960.

The study indicates that prescription drug expenditures across government and private payers rose 2.5 percent last year, in line with overall health care spending. At the same time, the share of dispensed generic prescriptions continued to increase, and 4 out of every 5 prescriptions is now filled with a generic. 

These trends reinforce the differences between prescription drugs and the rest of the U.S. healthcare system.  Unlike other healthcare sectors, the market for prescription medicines represents a delicate balance of innovation and affordability. This balance, often referred to as the prescription drug lifecycle, produces long-term savings as a result of the initial investments and research by innovator companies. This leads both to new medicines, and over time, to generics that consumers use at low cost for many years. With this built in cost-containment, the process supports patient access to affordable medicines as well as incentives for future innovation, bolsteringhope for tomorrow’s treatments and cures.

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