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Drug-Cost Increases in 2020 Will Outpace Inflation and Wage Growth

Healthcare systems may have trouble affording the cost of drugs next year, according to new research.

Analyzing drug purchases made by hospitals and non-acute care settings, the report from the pharmaceutical division of healthcare improvement company Vizient found that drug costs will increase by 4.57 percent in 2020 — more than inflation and wage growth. This will make healthcare much less affordable overall.

RELATED: 7 Ways to Talk to Your Patients about Cost of Care

That said, the research reveals an opportunity for administrators to reduce future spending, according to Fierce Healthcare. Nine of the top 10 drugs by Vizient members’ total spend for 2020 will be branded biologics, but the patents on several of these drugs are expiring in the third quarter of 2019. Investing in the biosimilar market could drive these costs down in the future.

Other significant findings from the report include:

  • Inflation for specialty drugs is expected to reach 4.23 percent, notable because specialty drugs take up more annual budget than non-specialty.
  • Drug shortages require health systems to pay for increased labor, which will cost $359 million in 2020 — more than in previous years.
  • Providers treating leukemia patients will experience increased costs because the standard of care for the condition is evolving to include new, branded and targeted therapy combinations. In the past, generic agents were standard.
  • According to Vizient, there will be a limited supply of IgIV for the second half of 2019 and first half of 2020, which will result in price increase. (The only exception? An abundant supply of Albumin, which will drop in cost.)
  • The cost of branded products overall will increase by 4.59 percent, and the only expected decrease is .02 percent for generic products.

RELATED: People in the U.S. are Mishandling Antibiotics, Affecting Resistance

For more information, download the complete report through the Vizient website.


Vizient: Health systems should expect a nearly 5% spending jump on drugs, Fierce Healthcare.

Last updated on 8/23/19

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