It will probably surprise no one that Covid-19 has pushed U.S. spending on medicines higher. Now we can put an actual figure to it. According to IQVIA, medicines spending reached $407 billion in 2021, a 12% increase over the prior year.

Meanwhile, the market for non-Covid medicines also grew, but more modestly. The 5% growth in spending on these medicines was tempered by the impact of biosimilars, which increasingly offset the use branded biological products. The figures come from IQVIA’s recently published U.S. Medicines Trends 2022 Report. IQVIA, a life sciences analytics and clinical research firm based in Durham, North Carolina, produced the report independently without any government or industry funding.

Americans are taking more medication overall, the report shows. Based on daily doses, IQVIA states that use of medication has increased 9.6% over the past five years. The vast majority of those products are retail drugs, such as those dispensed from pharmacies. The decline in drugs used in non-retail settings such as hospitals reflects the decline in elective procedures, the report said. Fewer elective procedures also contributed to plummeting prescription volume for opioids, continuing a trend going back five years, the report said.

New medicines launched in the past two years led to $46.4 billion in drug spending in 2021, up from $18.8 billion in the prior year. Covid-19 vaccines and therapies accounted for $29 billion in 2021 spending, up from $3 billion in 2020. If not for the new Covid-19 products, spending on new drug products would have trended down, the report said.

Not all of the vaccination news during the pandemic was good. IQVIA counts more than 7 million pediatric vaccines missed since March 2020. Adult vaccinations in 2020 stayed close to pre-pandemic levels due to a surge in pneumococcal vaccines and increased slightly in 2021. But IQVIA added that this increase has not kept up with population growth in older adults, a demographic that needs these vaccines. Influenza vaccines, however, grew and stayed well above pre-pandemic levels this past winter due to concerns that the flu and Covid together could lead to a severe respiratory virus season.

The pandemic led many people to postpone or cancel medical care. By the end of 2021, use of healthcare services had recovered to pre-pandemic levels, though there is still a backlog of missed patient visits, screenings, IQVIA said. Elective procedures and new prescription starts also need to catch up.

Covid-19 drove an increase in prescriptions, but that growth was offset by a fall in new prescriptions, which were 20% below baseline during the pandemic and have recovered to 5% below baseline in the first quarter of this year. Declines in medication usage in long-term care facilities was likely due to the rise in mortality at these sites as a consequence of the pandemic. Prescriptions across most therapeutic areas rebounded in 2021 following pandemic disruptions in 2020, the report said.

Telehealth was another area of healthcare that grew due to Covid-19. Such visits accounted for fewer than 1% of visits before the pandemic, than rose to 15% of visits. In recent months, telehealth use has fallen to 4% of visits, the report said.

Use of telehealth varied depending on the medical condition. Mental health saw a dramatic increase in telehealth usage, which continues today. While chronic diseases including hypertension, diabetes, and HIV also saw increases in telehealth, the frequent bloodwork and testing required has led telehealth usage to fall back for these conditions.

While Covid-19 has had a significant impact on drug spending in the past two years, that effect will moderate in coming years. The $29 billion spent on Covid vaccines and therapies will fall to between $4 billion and $5 billion per year afterward. Looking ahead, IQVIA projects that immunology, oncology, and neurology will continue to drive the growth in drug spending. Those categories will be well represented in the new brands of drugs that launch in the next five years, along with a significant number of rare disease treatments, the report said.

Specialty drugs, many of them biological products for complex conditions, are drawing an increasing amount of drug spending dollars. These medicines accounted for 56% of drug spending, up from 28% in 2011, the report said. This change is driven by the growth of specialty medicines for autoimmune conditions, oncology, and diabetes.

According to IQVIA, more than 250 new drugs are expected to launch in the next five years, contributing more than $100 billion in new spending. The report says that competition between drugmakers along with payer pressure are expected to keep prices of branded drugs flat or declining—as long as inflation is moderate. The introduction of biosimilars will reduce spending on biologic drugs by about $40 billion through 2026, a sum that expected to exceed the spending on small molecule generic drugs for the first time. Immunology, oncology, and neurology will drive most of this growth, the report said.

Of the 33 cell and gene therapies that have launched globally to date, only 18 are currently marketed in the U.S., according to the report. IQVIA projects that 55 to 65 new cell and gene therapies will launch by 2026, and about 60% of them will be available in the U.S. The growth of this segment of drug research is tempered by uncertainty about safety risks and the pace of clinical trials and regulatory reviews. Spending on these therapies has reached $3 billion and is projected to reach $11 billion by 2026. That spending could range anywhere from $7 billion to $20 billion, with the lower end of the projection reflecting more limited reimbursement due to risk-sharing agreements, lower net prices, or outcomes-based contracts.

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