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U.S. Drug Spending Increases Most in 13 Years to $373.9 Billion

U.S. spending on prescription drugs saw the largest increase since 2001, with the nation’s pharmacy bill rising to $373.9 billion last year as new treatments came to market and manufacturers increased prices on old ones.

“Last year’s $43 billion growth in spending on medicines was the highest ever,” said Murray Aitken, executive director the IMS Institute for Healthcare Informatics, which issued the report. The institute is part of IMS Health Holdings Inc., a data company that tracks prescription drug use.

Much of the increase came from treatments for hepatitis C, cancer, diabetes and multiple sclerosis after U.S. regulators approved more new drugs than any year since 2001. In total, spending on prescription drugs rose 13.1 percent in 2014, according to the report.

While 11.7 million Americans gained health coverage under the Patient Protection and Affordable Care Act, they weren’t a major driver of the spending growth, Aitken said. The main contributors were new and expensive specialty treatments, which include medicine for viral diseases, cancer and auto-immune disorders such as rheumatoid arthritis.

Drugmakers introduced four new products for hepatitis C, a liver virus that’s infected about 3 million people in the U.S. The drugs are among the most expensive treatments ever, with Gilead Sciences Inc.’s Harvoni listing at more than $1,000 a pill. In total, the U.S. spent $12.3 billion on the treatments, according to the report.

Drugmakers also lost less revenue from generic drugs in 2014. Patents on brand-name drugs worth $11.9 billion expired in 2014, compared with $19.6 billion a year before.

While drugmakers have been raising the list prices they charge, health insurers and pharmacy benefit managers have won discounts and rebates that kept a rein on total spending, according to the report. After rebates and discounts, price increases on existing brand drugs accounted for $10.3 billion in 2014 in spending growth, compared with $11.8 billion a year before.

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