Growth in Prescription Drug Spending Slows
By LINDA A. JOHNSON AP Business Writer

The national tab for prescription drugs last year grew at the second-slowest pace ever measured by a prominent health data firm.

Americans and their insurers spent $307.4 billion on prescription drugs in 2010, up just 2.3 percent from the previous year, according to data released Tuesday by IMS Health Inc. That's a slowdown from a 5.1 percent increase in 2009. Earlier in the decade, annual increases went as high as 13 percent.

Only 2008, the depths of the recession, saw drug spending grow more slowly.

That's bad news for drugmakers facing ever-growing competition to their pricey brand-name medications, but the slowdown also may be bad for doctors, and patients delaying needed medication.

A number of factors are slowing the growth:

— People are visiting their doctors less. Visits slowed 4.2 percent to 1.54 billion in 2010. That downward trend began in mid-2009, as the employment rate remained stubbornly high and more people lost health insurance.

— Patients are getting a bigger share of their prescriptions filled with lower-priced generic medicines. Generics accounted for 78 percent of retail prescriptions in 2010, up from 63 percent in 2006.

Use of generic drugs, which can cost a fraction of the price of brand-name medications, is skyrocketing, according to the IMS report. Spending on name-brand drugs fell 0.7 percent in 2010, while spending on cheaper, unbranded generics rose 21.7 percent.

The growth was driven by patients with no health insurance or financial problems, insurance company lists of preferred drugs and new generic versions of a number of widely used drugs such as Alzheimer's treatment Aricept and blood thinner Lovenox.

That will likely accelerate as cholesterol fighter Lipitor, the world's top-selling branded drug, will face generic competition in the U.S. after November.

— While more drugs lost patent protection, drugmakers are having a hard time coming up with expensive new medicines like Lipitor that treat common, chronic ailments. Such drugs helped the drug business skyrocket in the 1990s and the beginning of the last decade.