While the rate of inflation in health care has begun to slow, spending on medications last year increased at the highest rate since 2001.
Total spending on medication increased 10.3 percent for the year to $373.9 billion, according to the IMS Institute for Healthcare Informatics. The spike reflects higher spending on new specialty medicines and price increases on existing brand-name drugs. Brand-name drug prices increased by an average of 5 to 7 percent, after discounts and rebates.
Innovative specialty drugs treat specific diseases like multiple sclerosis and rheumatoid arthritis. The single largest driver of the growth in prescription drug spending was Sovaldi, a new specialty drug manufactured by Gilead Sciences and approved by the Food and Drug Administration in late 2013.
Sovaldi, which knocked arthritis medication Humira from its spot as the top-earning drug in America, costs $1,000 per pill (or $84,000 over a 12-week course of treatment) but it offers a cure rate of 90 percent. Last year the drug saw $8.5 billion in sales in the United States alone.
Sales of the 50 drugs with the most U.S. revenue last year increased 20 percent to $120 billion, according to EvaluatePharma, a market research publication for the pharmaceutical industry.
Advances in medical research mean that more specialty drugs could be hitting the market soon. A new class of cholesterol drugs slated for approval later this year could generate more than $1.5 billion in sales per year. Unlike the Hepatitis C treatment, which is used once by patients, cholesterol drugs are maintenance medications used on an ongoing basis, which means they could cost exponentially more in total, according to a report this month by PWC Health Research Institute.