Increases in drug spending slow.

• Position: TRENDS

The rate of growth in prescription drug spending appears to be slowing. A March 2017 annual report on national health care expenditures by the federal Centers for Medicare and Medicaid Services reveals that among all health services, prescription drug spending has the largest projected slowdown. Growth held to just 5 percent in 2016, compared with 9 percent in 2015. The main reason for this "decelerating growth," the agency stated, is that "the use of drugs to treat hepatitis C is expected to have fallen in 2016." For employer-sponsored health plans, Express Scripts' 2016 Drug Trend Report also found that spending increases on medicines were down from an average of 5.2 percent in 2015 to just 3.8 in 2016.

Another CMS study from January also shows that the use of generics continued to climb, reaching 83 percent of all drugs dispensed in 2015. Researchers found: "Prices of generic prescription drugs increased less than 1 percent in 2015."

All this is welcome news to state Medicaid directors, among others. The high price of a few drugs has stressed Medicaid budgets and has made some lawmakers ask, "How can we control costs and still provide these lifesaving medicines?"

PhRMA, the brand medicine manufacturers' trade association, points out that brand biopharmaceutical companies retain only around 63 percent of total gross spending on brand medicines and just 47 percent of total U.S. spending on prescription drugs, including generics. More than one-third of a drug's list price is rebated back to insurance companies, pharmacy benefit managers and the government, or is retained by other stakeholders in the supply chain.

Several drug manufacturers have voluntarily provided more transparency on the discounts and rebates they pay into the health care system, to government insurers and to middlemen, including pharmacy benefit managers, according to a CNBC report in late February. Johnson &amp...