Projected US Spending on Psychotropic Medications, 2013-2020

Context: Spending on psychotropic medications has grown rapidly in recent decades, and by 2009 medications accounted for 25 percent of all US spending in the treatment of mental illness and substance use disorders.  However, many brand psychotropic drugs will lose patent protection in the next few years, and there are few new medications in development.  Changes in the trajectory of spending on mental health and substance abuse medications should be important to patients, providers, insurers, and policymakers who are trying to balance the goals of improving patient health while maintaining or reducing costs.  We present projections of drug spending over the period 2013-2020 that take into account patent expirations and other factors.

Data and Methods: We use the National Prescription Audit database compiled by IMS Health, which is based on a sample of electronic pharmacy claims transactions, for the period 2002 through 2012. In addition, we talked to experts and read the literature to determine possible changes in the new drug pipeline, and about possible reasons for utilization to change.   We also determined which medications were going off patent in order to simulate the effect of this on utilization and prices.  Projections of price and quantity were carried out at the product level for five specific drug classes of particular importance and at the class level for all other psychotropic drug classes.   

Results: We project that spending on psychotropic medications will slow over the period 2013–2020.  The average annual increase is projected to be just 2.7 percent per year, continuing the steady deceleration in annual psychotropic medication spending growth that had peaked at 25.6 in 1998.  The projected growth for psychotropic medications is considerably slower than what is expected for prescription drugs overall. 

Discussion: The main drivers of this expected deceleration include the slowdown in development of new drugs, upcoming patent expirations which will lower prices, and the growing ability of payers to manage utilization and promote use of generics.  The slowdown will relieve some cost pressures on payers, particularly Medicare and Medicaid, which between them fund more than half of all spending on antipsychotic drugs.