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WASHINGTON — Spending on prescription drugs is expected to increase at an accelerating rate over the next 10 years, according to government estimates released Wednesday — ramping up to as much as 6.1 percent growth by 2020.

The Office of the Actuary at the Centers for Medicare and Medicaid Services annually forecasts how much money patients, insurance companies, and the government will spend on health care in the coming decade — so-called national health expenditures. Broadly, they predict total health spending in the U.S. will increase by an annual average of 5.5 percent until 2027.

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  • As a graduate student in the basic biomedical sciences, this is an issue I follow quite closely. I think perhaps the most overlooked element of this discussion is how much pharmaceutical prices are changing relative to total healthcare expenditure. For 2017 CMS reported that pharmaceuticals accounted for 10% of the total cost of healthcare in the US (for a no doubt whopping $333 billion), while hospital care and physician/clinical services came in at 33% ($1.1 trillion) and 20% ($694 billion) respectively. Additionally, physician and clinical services spending growth outpaced the change in pharmaceutical expenditures by 10-fold. Estimates from Bio actually reveal higher outlay on pharmaceuticals (17.9% of total healthcare spending), but also indicate that as a proportion of healthcare costs this relationship between pharmaceuticals, hospital care, and physician/clinical services has remained fairly consistent in recent history. Knowing this, any discussion of “percent increases” in pharmaceutical prices must be placed within the context of the healthcare providing sector as a whole.

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