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Institute Report
The Use of Medicines in the U.S. 2024: Usage and Spending Trends and Outlook to 2028
Annual report on medicine spending trends in the U.S.
May 07, 2024
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Report Summary

The U.S. emerged from the COVID-19 pandemic in 2023 and healthcare systems adjusted to the longer-term consequences on the utilization of health services, medicine use, and total expenditure on vaccines and therapeutics. As we examine the past year and look to the future, new areas of interest — most notably treatments for obesity and the implementation of the Inflation Reduction Act – have come to the fore and command attention. At the same time, spending trends have demonstrated a resilience to the broader macroeconomic trends and accelerated to levels not seen in nearly a decade, masked by the declining volume and spending on COVID-19 vaccines and therapeutics.

This annual trend report is part of a continued effort to advance our collective knowledge by providing evidence-based research, which can help establish a common foundation for discussion and understanding by all stakeholders. It is intended to contribute to the advancement of health in a system that remains highly fragmented and opaque.

Key findings:

  • Overall spending growth in the U.S. market for medicines slowed to 2.5% in 2023, reaching $435Bn at net price level, reflecting a sharp decline in COVID-19 vaccines and therapeutics.
  • Spending growth accelerated to 9.9%, when COVID-19 vaccines and therapeutics are excluded, driven by innovation in areas such as oncology, immunology, diabetes, and obesity.
  • Health services utilization including visits, diagnostics, elective procedures and drugs declined 3% from 2022, reflecting a 4-6% reduction across all indicators except for new prescriptions, which rose 3%.
  • The average out-of-pocket cost per retail prescription increased in 2023, driven primarily by higher brand costs for GLP-1 agonists in diabetes and obesity; however, patient out-of-pocket costs remained less than $20 for 90% of prescriptions.

Other findings:

Health services utilization in the U.S. in 2023 was below 2022 levels across all metrics except new prescriptions
  • The level of utilization in the health system is critical to ensure all Americans receive the preventive and treatment services they need.
  • A Health Services Utilization Index has been created and includes five essential components of a health system and measures their utilization against the prior year to understand changes in healthcare and potential gaps in care.
  • The five index components are equally weighted, and for each component, a score of 100 or higher indicates equivalent or higher levels of utilization compared to the prior year, including elective procedures, doctor visits (face-to-face — office, hospital or clinic — or via telehealth), diagnostic lab tests, new brand or generic prescriptions filled, and routine vaccinations (adult, pediatric, and flu).

Notable shifts and impacts in medicine use occurred across therapy areas in the U.S. in recent years
The U.S. net market grew by 9.9% in 2023 — excluding the impact of COVID-19 vaccines and therapeutics which declined by $28Bn
  • U.S. medicine spending at estimated net manufacturer prices reached $435Bn, up 9.9% excluding the impact of declining COVID-19 spending.
  • Market growth of 9.9% matched the 2015 growth rate during the early period of adoption of Hepatitis C therapies and has only been exceeded in recent years by 2021, when spending was boosted by the first year of adoption of COVID-19 vaccines.
  • Net spending in the past five years increased $102Bn with a 5.5% CAGR.

U.S. medicines spending is forecast to grow 4 to 7% through 2028 lifted by novel drugs and offset by expiries and price cuts
  • Total net spending on medicines in 2028 is expected to increase $127Bn compared to 2023 as volume growth drivers, and adoption of innovation will be partly offset by drivers of lower prices, including patent expiries and the effects of legislation.
  • Over the next five years, medicine spending will grow between 6–9% on a list price basis and 4–7% after discounts and rebates.
  • Growth will be driven by adoption of newly launched innovative products, with an average of 50–55 new medicines launching per year over the next five years, including those in oncology or with specialty or orphan status, as well as some more traditional therapies in diabetes, obesity and neurology.

Net prices for protected brands are forecast to decline -1 to -4%, while list prices will grow 1 to 4% including impact of price cuts
  • As public pressure on drug pricing has escalated, list price increases have slowed to 4.9% in 2023 and are expected to average 1–4% per year through 2028, including the expected effects of the Inflation Reduction Act.
  • Net price growth is likely to continue to see declines in the -1 to -4% range as the structural drivers of low net price growth are expected to remain in effect and be amplified by new legislation and increased competitive intensity in therapy areas with new launches and/or upcoming biosimilar events, such as diabetes and immunology, and oncology later in the forecast.
  • The price cuts for insulin products announced by manufacturers in early 2023 are expected to lower list prices from 2024 forward and have been followed by additional products in respiratory, with expectations in other therapy areas linked to their exposure to Medicaid populations and historically high list price growth driving inflation penalties.

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