YOKOSUKA, JAPAN - MAY 28: U.S President Donald Trump and his wife Melania Trump (not seen), flanked ... [+]
U.S. drug spending is projected to grow this year by 2.5% to more than $370 billion, boosting overall healthcare spending past $3.3 trillion for 2019, according to a new report.
The report by Fitch Solutions Macro Research, a division of Fitch Ratings, comes as Congress and the Trump administration examine ways to reign in the rising cost of prescription drugs. Regulations thus far haven't done much to reign in the rising cost of prescription drugs, according to the Fitch analysis which projects health expenditures through the next five years.
As policymakers and politicians debate new regulations and efforts to temper healthcare spending, Fitch Solutions is now forecasting U.S. pharmaceutical sales will account for almost 10% of overall health expenditures in 2023. By then, U.S. drug spending will reach $420.8 billion, or 9.7% of total health spending of $4.3 trillion, Fitch Solutions said Tuesday.
A primary focus of Congress and the Trump administration should be the Medicare health insurance program for the elderly as more than 10,000 baby boomers turning 66 every day become eligible for such health benefits. The Fitch analysis indicates there have been high profile hearings bringing drug makers and pharmacy benefit managers (PBMs) before Senate and House committees but no legislation has gained a consensus. And Trump himself in April said healthcare reform will wait until after the 2020 Presidential election when he is expected to be renominated by Republicans to run for re-election.
“Medicare is on course to becoming the leading payer for prescription drugs in the US,” Fitch Solutions said, adding that Medicaid is “also projected to become a more prominent payer for prescription drugs.”
Meanwhile, private health insurance isn’t expected to contribute “significantly to growth in prescription drug expenditures,” though policy moves by the Trump administration and Republicans in Congress are expected to hit Americans with higher out of pocket costs.
When Republicans controlled both houses of Congress, they approved tax reforms that stripped from the Affordable Care Act the requirement that Americans buy health insurance. That move is going to lead to higher healthcare costs generally and prescription drugs in particularly, the Fitch analysis indicates.
“Out-of-pocket spending on prescription drugs is forecast to become more common due to the removal of the penalty for not having insurance,” Fitch Solutions said.
