U.S. Spending More On Drugs As Medicaid Enrollment Increases

A drastic rise in prescription drug use was seen in 2014, driven mainly by expanded coverage to Medicaid patients, according to the findings of a new report. 

While the total demand for health care services fell last year, spending on medicine was at the highest rate in years, according to information released by the IMS Institute for Healthcare Informatics, in a report titled “Medicines Use and Spending Shifts: A Review of the Use of Medicines in the U.S. in 2014”, which tracks the healthcare system and information on how insurance is used.

Researchers revealed medicine spending increased by 13.1%, reaching nearly $374 billion. This is the highest rate since 2001 when it reached a 17% increase.

The spike was driven primarily by the introduction of new medications, such as those that treat cancer, Hepatitis C and multiple sclerosis. Specialty medication accounted for one-third of spending, a 26% increase of more than $124 billion.

More than 161,000 patients began treatments for Hepatitis C, that is four times the amount from the previous peak and nearly 10 times the amount from the previous year.

The increase was also boosted by the higher list prices of many medications and the introduction of generic drugs as the patents expired on brand name.

The report indicates that the increase was mostly driven by those newly insured by Medicaid who were able to be covered under the Affordable Care Act (ACA) expansion.

The increase in Medicaid prescription use increased by nearly 17% in 2014, accounting for 70% of the overall growth seen during the year.

This is the first year after expanded coverage through the ACA offering millions of Americans coverage. The ACA also expanded coverage of Medicaid in many states who chose to establish a marketplace exchange.

States that expanded coverage filled 25% more prescriptions than the previous year. In states that did not establish a marketplace or expand Medicaid the increase in filled prescriptions was much smaller, at nearly 3%.

The total demand for healthcare services decreased despite millions of people receiving coverage through the ACA. Even those with private commercial coverage filled fewer prescriptions and had fewer doctor visits.