National trends in prescription drug expenditures and projections for 2017

Methods. Drug expenditure data through calendar year 2016 were obtained from the QuintilesIMS National Sales Perspectives database and analyzed. Other factors that may influence drug spending in hospitals and clinics in 2017, including new drug approvals and patent expirations, were also reviewed. Expenditure projections for 2017 for nonfederal hospitals, clinics, and overall (all sectors) were made based on a combination of quantitative analyses and expert opinion.

H ealthcare spending, especially drug expenditures, continues to occupy a significant position in national political and policy discussions.Recent data have shown that after several years of slowed growth, healthcare spending in the United States rose 5.3% to $3.03 trillion in 2014 and 5.8% to $3.2 trillion in 2015. 1 These expenditures represented 17.8% of the U.S. gross domestic product in 2015.A key driver of this growth was an increase in the number of people with health insurance under the Affordable Care Act (ACA) and the corresponding increase in healthcare utilization, including prescription drugs.Spending on prescription drugs also grew faster in 2014 and 2015 than in several previous years.According to the Centers for Medicare and Medicaid Services (CMS), retail drug spending in the United States increased 12.4% in 2014 to $298 billion and 9.0% in 2015 to $324.6 billion.The rate of growth in prescription drug expenditures in both 2014 and 2015 exceeded the rates of growth in all other categories of national healthcare expenditures and accounted for 10% of total healthcare spending in both years. 1 e340 AM J HEALTH-SYST PHARM | VOLUME 74 | 2017   For Personal Use Only.Any commercial use is strictly prohibited.For health-system pharmacists and pharmacy managers, understanding how drug expenditures may change in the future is important for accurate budgeting and planning.Historical trends in drug spending clearly relate to future expenditures.Forecasting drug expenditure patterns also requires consideration of potential price changes, availability of cheaper generic alternatives, changes in utilization (including the emergence of new indications for older products), and technological advancements that include the launch of new products filling therapeutic gaps.While it has never been an easy task, recent political and market phenomena have made the process of projecting expenditure patterns even more difficult.
On the political and policy fronts, the Trump administration and Republican-led Congress have indicated that they plan to continue to try to repeal and replace the ACA.Clearly this is a moving target; at the time this article was written, the initial attempt at reform had failed.Any successfully approved replacement plan will require many months to implement, during which time the planning efforts of insurers and healthcare systems will be even more uncertain. 2Even if the ACA is not repealed, a number of legislative and regulatory proposals have been floated by the new administration that would dramatically affect healthcare and drug utilization and expenditures, including the possibility of federal negotiation of drug pricing for Medicare and changes to the regulatory standards for new drug approval.Unfortunately, these proposals lack meaningful detail, so planning for their impact is practically impossible at this time.
The legislative and regulatory uncertainties also extend to some recent legislative changes that are already in place, such as the 21st Century Cures Act. 3 Signed by President Obama on December 13, 2016, this act is a broad biomedical research funding bill that was strongly supported by Republicans and Democrats alike.Key pro-

KEY POINTS
• Total prescription sales in the United States for the 2016 calendar year were $448.2 billion, 5.8% higher than in 2015.
• Prescription expenditures in nonfederal hospitals totaled $34.5 billion, a 3.3% increase in 2016 compared with 2015; clinic expenditures rose to $63.7 billion, an increase of 11.9%.
• We project overall prescription drug spending to rise by 6.0-8.0%; in clinics and hospitals we anticipate an 11.0-13.0%and a 3.0-5.0%increase, respectively, in 2017.
visions included $4.8 billion over 10 years for the National Institutes of Health to fund programs such as the previous administration's Precision Medicine Initiative (an initiative to accelerate biomedical discoveries and advanced treatments) and Cancer Moonshot (an initiative aimed at making cancer therapies available to more patients and increasing the abilities to prevent and detect cancer early).
The program also included funding to streamline the Food and Drug Administration (FDA) process for drug and device approval, which could make for faster development and approval of innovative, and likely very expensive, new drugs.Market phenomena, particularly those affecting drug pricing, also continue to challenge health-system pharmacy leaders.The public and political drama that unfolded when Martin Shkreli, former chief executive officer of Turing Pharmaceuticals, raised the price of pyrimethamine (Daraprim) from $13.50 to $750 per tablet, has been repeated more recently with other products. 4Absurdly high pricing of epinephrine autoinjectors (EpiPen, Mylan), 5 naloxone au-toinjectors (Evzio, Kaléo), 6 the newly approved corticosteroid deflazacort (Emflaza, Marathon Pharmaceuticals), 7 and other drugs has put the manufacturers of those products in the public spotlight and made them the subjects of congressional inquiries.Despite mounting pressure, there does not seem to be an end in sight to the exploitive pricing policies of some drug manufacturers.
Health-system leaders will almost certainly struggle with these and similar uncertainties in planning drug budgets for 2017 and beyond.Because all possible future factors that will impact spending are not known, the best strategy is to use the information that is available for such planning.This article describes drug expenditures in 2016 and reviews factors likely to influence prescription drug spending in 2017, including new drugs and newly available generics.We predict drug spending for 2017 in nonfederal hospitals, clinics, and across all settings.

Methods
The methods used are described in detail in supplementary material online (available at www.ajhp.org).Data for spending in 2016 were obtained from the QuintilesIMS National Sales Perspectives (NSP) database, which tracks purchases of medications by hospitals, clinics, retail pharmacies, mail service pharmacies, home health facilities, long-term care outlets, and other healthcare entities.The NSP data analyzed extended through December 31, 2016.
We conducted 3 focused analyses of selected drug classes thought likely to significantly influence drug spending in hospitals or clinics.First, we examined antimicrobial expenditures in 2016, with special emphasis on antibacterials and drugs indicated for the treatment of hepatitis C virus (HCV) infection.Antimicrobials were categorized, based on their spectrum of activity, as antibacterials, antifungals, and antivirals.non-human immunodeficiency virus (HIV)-targeted agents (i.e., not including those targeting HIV), and HCV antivirals.HCV antivirals included ribavirin, interferon, telaprevir, simeprevir, sofosbuvir, boceprevir, daclatasvir, ledipasvir-sofosbuvir, elbasvirgrazoprevir, sofosbuvir-velpatasvir, and ombitasvir-paritaprevir-ritonavir (available with or without dasaburvir).
Second, we analyzed expenditures for granulocyte colony-stimulating factor (GCSF) products, specifically filgrastim, tbo-filgrastim, and the biosimilar filgrastim-sndz.We assessed the impact of tbo-filgrastim and filgrastim-sndz on overall expenditures for GCSF products from January 2015 through December 2016.
Third, we assessed expenditures for immunoncology agents, a class of drugs that is increasingly important in treating oncological disorders.We specifically focused on agents that stimulate the immune system by inhibiting the interaction between the programmed cell death protein 1 (PD-1) expressed on T cells and its ligand, programmed cell death ligand 1 (PD-L1), which is expressed on various tumors.For this class of agents, total expenditures across all channels were analyzed each quarter from January 2015 through December 2016.The timing of significant regulatory events (i.e., labeling updates to reflect additional indications) was identified and displayed graphically with the expenditure trends to show their influence on spending.

Results
Historical trends in prescription expenditures.Total prescription expenditures in the United States for the 2016 calendar year were $448.2 billion across all healthcare sectors, which was 5.8% higher than in 2015.Table 1 shows the distribution of drug expenditures in 2016 across the various sectors.Just fewer than half ($217.4 billion, or 48.5%) of drug purchases from manufacturers were made by retail pharmacies, followed by mail-order pharmacies ($103.2bil-lion, or 23.0% of total expenditures), clinics ($63.7 billion, or 14.2% of total expenditures), and nonfederal hospitals ($34.5 billion, or 7.7% of total expenditures).The remaining sectors together accounted for less than 10% of total expenditures.Among these top sectors, clinics had the largest percent growth (11.9%)from the previous year.Mail-order pharmacies, retail pharmacies, and nonfederal hospitals had 6.7%, 4.7%, and 3.3% growth in drug expenditures, respectively, compared with 2015.
Factors driving growth.The 5.8% growth in overall drug expenditures in 2016 resulted from increased prices of existing drugs (5.4%) and spending on new drugs (2.2%), while utilization of existing drugs had a negative effect on spending (-1.7%).Factors that drove growth in 2016 differed by sector.In clinics the 11.9% growth in expenditures was driven mostly by the increased use of existing products (8.1%), whereas new products and increased prices contributed 1.9% each to expenditure growth, as shown in Table 2.The majority of spending in clinics was for injectable products ($49.5 billion [77.7%] of $63.7 billion).Nonfederal hospitals also spent more on injectables ($25.8 billion [74.8%] of $34.5 billion) than noninjectables ($8.7 billion) in 2016.In nonfederal hospitals, the 3.3% growth in expenditures from 2015 was driven primarily by increased prices of existing drugs (4.6%) and the use of new products (1.6%).Utilization of existing products (-3.0%) had a negative effect on growth of expenditures.
Trends in overall drug spending.Figure 1 shows the annual changes (increases or decreases) in prescription drug expenditures in the United States Retail pharmacies include standalone chain and independent stores, as well as mass merchandisers and food and convenience stores with a licensed pharmacy.Mail-order pharmacies include licensed mail service pharmacies, including both private-sector and federal facilities.Clinics include physician offices and outpatient clinics, including general, family medicine, and specialty clinics covering oncology, nephrology, dialysis, family planning, orthopedics, and urgent care centers.Nonfederal hospitals include all non-federally-owned facilities licensed as hospitals, including inpatient treatment and rehabilitation facilities, in addition to general and specialty acute care institutions.Long-term care includes nursing homes and residential care facilities.Staff-model health maintenance organizations (HMOs) include closed-panel HMO pharmacies and hospitals, union clinics and pharmacies, and workers' compensation clinics.Home healthcare includes licensed home health organizations and visiting nurse entities.Federal facilities include Public Health Service and other federal hospitals, and U.S. ships at sea (Veteran's Health Administration facilities are normally included in the federal facility sector, but data on expenditures were not available after December 31, 2013).Other covers a variety of otherwise unclassified government accounts, as well as entities such as jails, prisons, and veterinary hospitals and clinics.For Personal Use Only.Any commercial use is strictly prohibited.Total growth comprised growth attributable to 3 factors: (1) new products (products that were not on the market in the previous year), primarily newly approved and marketed agents, (2) price (changes in the unit cost of drugs that were on the market in the previous year), and (3) volume and mix (changes in volume of utilization of existing products or changes in utilization patterns [e.g., a shift from one product to another, as when prescribing moves from brand to generic products]).Top drugs overall.Table 3 shows the top 25 drugs by expenditures across all sectors in 2016.Adalimumab was the top drug, accounting for $13.6 billion in expenditures, followed by insulin glargine ($10.1 billion) and ledipasvirsofosbuvir ($10.0 billion).Adalimumab expenditures grew 27.6% from 2015, likely due to price increases by the manufacturer in anticipation of a biosimilar (adalimumab-atto) entering the market. 9,10Four insulin products are included in the list of top 25 drugs by expenditures (insulin glargine, insulin lispro, insulin aspart, and insulin detemir) and together accounted for almost $24 billion in spending in 2016.Price increases for insulin products have been a source of concern for patients and payers and have prompted accusations of price fixing. 11,12Among the top 25 drugs, ledipasvir-sofosbuvir was the product with the greatest reduction in expenditures (-30.1%)from 2015.This decline may be a result of the availability of new and competitively priced HCV products on the market.The drugs with the largest increases in growth from 2015 were nivolumab (246.2%) and apixaban (98.0%).
Top drugs in clinics.The top 25 drug products based on expenditures in 2016 in clinics are listed in Table 4. Infliximab has been the top drug since 2013, accounting for $3.5 billion in expenditures in 2016, followed by pegfilgrastim, rituximab, bevacizumab, trastuzumab, and nivolumab-each accounting for expenditures in excess of $2.0 billion.Among the top 25 clinic drugs, those with the biggest percentage increases in expenditures from 2015 to 2016 were nivolumab (258.1%)For each drug listed, the expenditures shown are the total for brand and generic products and for various dosage forms.and pembrolizumab (104.7%).In general, biologics and cancer drugs contributed significantly to drug spending in clinics.Expenditures specific to antineoplastic agents are provided in eTable 1 (available at www.ajhp.org).
Top drugs in nonfederal hospitals.For Personal Use Only.Any commercial use is strictly prohibited.
categories with over $1.0 billion in expenditures, the greatest increases occurred in hospital solutions (14.3%) and immunologic agents (14.1%); antiinfectives had the largest decrease in growth (-8.1%)from 2015.
Trends in antimicrobials.Antimicrobial expenditures across all sectors experienced a decrease of 2.3%, with antibacterials accounting for the largest decrease (-6.5%) and antifungals experiencing the largest increase (4.5%).The portion of antibacterial expenditures attributable to each sector in 2016 was consistent with past findings, with the majority in the retail For each drug listed, the expenditures shown are the total for brand and generic products and for various dosage forms.
sector followed by nonfederal hospitals.With the exception of clinics (2.4% growth), all sectors experienced a decrease in antibacterial expenditures, with nonfederal hospitals and mail-order pharmacies having the largest decreases (-8.1% and -9.6%, respectively).
Of particular interest among antimicrobial drugs were expenditures for HCV antivirals, which decreased 16.0%, from $18.5 billion in 2015 to $15.5 billion in 2016.Utilization (and thus expenditures) in this class tends to shift rapidly to newer agents. 13or example, the combination agent ledipasvir-sofosbuvir, which became available in 2014, was the top drug based on expenditures in 2015 across all sectors and accounted for the largest portion of HCV antiviral expenditures in 2015 (77.4% of all HCV antiviral expenditures across all sectors).However, in 2016, ledipasvirsofosbuvir experienced a 30.1% decrease in spending and accounted for a smaller proportion of HCV antiviral expenditures (64.3% of all HCV antiviral expenditures).Lower expenditures were observed for other drugs in the HCV antiviral class, with the exception of daclatasvir and the 2 agents approved in 2016-elbasvir-grazoprevir and sofosbuvir-velpatasvir.Daclatasvir received FDA approval in late 2015, so expenditure growth in 2016 was primarily a function of comparing expenditures over a full year to a partial year.Daclatasvir is not expected to contribute significantly to expenditures in 2017 because other agents are preferred.Elbasvir-grazoprevir and sofosbuvir-velpatasvir, with 2016 expenditures of $486.1 million and $1.1 billion, respectively, appear to have taken some of the market from other HCV antivirals.
Trends in biosimilars.In previous reports, we analyzed expenditure trends for all available GCSF products (i.e., tbo-filgrastim and filgrastim) to assess the impact of competition on expenditures. 8,13The first U.S.approved biosimilar, filgrastim-sndz, was brought to market in the fourth quarter of 2015.The market share of filgrastim-sndz in 2016 was 7.6%, with filgrastim accounting for 74.8% of all GCSF expenditures.The market share of tbo-filgrastim increased slightly to 17.6% in 2016 from 15.9% in 2015.Total GCSF expenditures in all channels declined from $287.2 million in 2015 to $249.5 million in 2016, mostly attributable to lower expenditures in clinics and nonfederal hospitals (Figure 2).During 2015 and 2016, expenditures within these channels decreased for GCSF products, with an average net reduction in expenditures of approximately $800,000 per quarter.

Trends in immunoncology agents.
Expenditures for immunoncology agents, specifically those that inhibit immune checkpoints, are projected to reach $7 billion annually by 2020. 14n 2016, spending on this class was $4.7 billion across all sectors, which included the drugs atezolizumab, ipilimumab, nivolumab, and pembrolizumab.This represents a 159.1% increase from the $1.8 billion spent on these drugs in 2015.The major driver within this class is nivolumab, with the expenditure growth likely due to the fact that the product is indicated for a high-incidence tumor and received numerous labeling updates that expanded its indications over a short period of time, as shown in eFigure 1 (available at www.ajhp.org).Pembrolizumab's label is approved for many of the same indications as nivolumab.While pembrolizumab's expenditures and growth are high, they are not of the same magnitude as those of nivolu mab.However, pembrolizumab's growth in the last quarter of 2016 far outpaced that of nivolumab (43.5% versus 7.0%, respectively).Ipilimumab saw growth in expenditures for the first quarter in 2016 that later stabilized, with little growth throughout the rest of 2016.
Recent and anticipated drug approvals.Shown in Table 7 are selected agents that have or may receive FDA-approved labeling in 2017.Specialty drugs and biologics dominate this list, and, as in previous years, agents that treat inflammatory disorders and viral infections are numerous.Approvals for several cancer drugs are also anticipated in 2017, including the fourth PD-1/PD-L1 inhibitor (durvalumab) and various small-molecule drugs targeting cancers with specific mutations.A concerning omission from this list of expected approvals is any antibacterial agent.Problems with the antibiotic pipeline have been highlighted recently. 15hile new drug approvals in 2017 will impact spending, so too may approvals that occurred in 2016.We focused on oncology drugs that were For each drug listed, the expenditures shown are the total for brand and generic products and for various dosage forms unless otherwise stated.
approved in 2016 because they tend to have a greater impact on pharmacy budgets in nonfederal hospitals and clinics than other classes of drugs.Only 4 oncology drugs were approved in 2016, compared with 16 in 2015.The costs of these 4 drugsatezolizumab, olaratumab, rucaparib, and venetoclax-ranged from $11,563 to $15,388 for 28 days of therapy based on their average wholesale price. 16hile the number of new approvals was low, this was balanced by a significant number of labeling changes to reflect new indications for other drugs.For example, there were 6 labeling changes to immunoncology agents. 17mong the 4 oncology drug approvals in 2016, atezolizumab is the most likely to affect health-system budgets.Initially approved for metastatic urothelial cancer, its label was expanded to include patients with non-small-cell lung cancer whose disease continued to progress while receiving platinumbased chemotherapy.Nivolumab and pembrolizumab are also indicated for non-small-cell lung cancer; as a result, atezolizumab will likely not make as much of a budget impact as its competitors.The other approved agents-venetoclax, olaratumab, and For Personal Use Only.Any commercial use is strictly prohibited.Includes mostly antibacterials with some antiparasitic agents, with the latter being minimal in terms of expenditures.
rucaparib-are indicated for niche tumor types with a relatively low incidence.Thus, we expect that while they will increase health systems' budgets, their overall budgetary impact is not expected to be as great as those of agents approved in previous years.
Patent expirations and generics.Generic drugs, including branded generics, accounted for 25.5% of the overall drug spend, down 1.2% from 2015, and comprised 16.9% and 29.7% of spending on injectables and noninjectables, respectively.In nonfederal hospitals, 33.6% of the total drug spend was for generics, and the portion of spending on generics increased among injectable (31.7%) versus noninjectable (39.2%) products compared with 2015.The growth in generic drug expenditures in nonfederal hospitals from 2015 to 2016 was lower compared with the rate from 2014 to 2015.Price increases drove expenditure growth among branded generics in nonfederal hospitals in 2016, whereas growth for nonbranded generics was mostly attributable to new products.In clinics, 15.9% of the total drug spend was for generics, and generics accounted for 14.0% and 22.6% of spending on injectables and noninjectables, respectively.Increased volume of utilization drove most of the growth in generic expenditures in clinics in 2016, though reduced prices of nonbranded generics had a significant downward effect.
Patent expirations in 2016 were primarily for oral medications used in the outpatient setting.Generic approvals were also lower in 2016 than in previous years.In 2016, there were 73 first-generic submissions to FDA, compared with 97 and 90 applications in 2014 and 2015, respectively. 18Ezetimibe, imatinib, olmesartan, oseltamivir, and quetiapine extended release received generic approval in 2016, but none were in the top 25 drugs based on spending in hospitals, clinics, or all sectors combined.
The most significant generic approved in 2016 was rosuvastatin. 19s shown in Table 3, rosuvastatin dropped from the fifth ranked drug to the ninth based on expenditures across all sectors (a reduction of 20.9% from 2015).With an overall annual drug spend of $6.4 million in 2015, many people were anticipating even greater reductions in expenditures for rosuvastatin in 2016, but patent litigation initiated by AstraZeneca caused delays in the availability of generic products. 20,21A settlement was reached that allowed Watson Laboratories to release a generic version in May 2016. 21Other manufacturers were also approved to produce generics in June 2016.As a result, additional savings should occur in 2017.
The generic availability of daptomycin resulted in savings for nonfederal hospitals in 2016.Hospira received approval for generic daptomycin in September 2014; however, ensuing patent litigation delayed the launch.In November 2015, the patent for Cubicin that expired on June 15, 2016, was validated but 4 patents with expiration dates in 2019 and 2020 were invalidated. 4Fresenius Kabi, Teva Pharmaceutical Industries Ltd., and Pfizer Injectables released daptomycin in fall 2016, resulting in a 4.9% decrease in expenditures from 2015 for that drug in nonfederal hospitals (Table 5).
Table 8 lists selected branded agents that are expected to lose patent protection in 2017.Predicting patent expiration dates and subsequent  For Personal Use Only.Any commercial use is strictly prohibited.difference in spending in nonfederal hospitals and clinics.
In addition to new generics that may become available, changing prices of existing generic products can influence expenditures.The rapid increase in the price of previously inexpensive generic products has been a major issue and was highlighted in a recent report. 22We evaluated older medications with high growth in expenditures in 2016 in nonfederal hospitals and clinics (combined) (Table 9).Pyrimethamine had the greatest overall increase in expenditures from 2015, at 552.7%, followed by thiotepa (394.3%) and zinc sulfate (327.0%).Other items of note on this list are vasopressin and calcitonin.Vasopressin had $319.1 million in expenditures in nonfederal hospitals and clinics combined in 2016, up 102.9% from 2015.Calcitonin had $114.9 million in expenditures in 2016, up 58.6% from 2015.
Drug expenditure forecast for 2017.We predict an overall (all sectors combined) increase of 6.0-8.0%

Continued from previous page
in drug expenditures in 2017.We also estimate that drug spending in clinics and nonfederal hospitals will increase by 11.0-13.0%and 3.0-5.0%,respectively, in 2017.
These estimates for growth are consistent with other forecasts.For example, Express Scripts predicts that retail drug spending will rise 10.3% in 2017, driven mostly by growth in specialty drugs. 23CMS has suggested that retail outlet sales of prescription drugs will rise 5.7% in 2017. 24QuintilesIMS has predicted an overall increase of approximately 6.0% for the whole U.S. market. 25

Discussion
In this paper we have analyzed specific drugs and drug classes that contributed to growth in prescription expenditures in 2016 and those that may be expected to do so in 2017.Growth in drug expenditures in 2016 in clinics, nonfederal hospitals, and overall moderated considerably compared with 2015.Actual growth was lower than anticipated by CMS, Express Scripts, and our own forecast. 8,26,27This may be partly due to an unanticipated moderation in growth of expenditures for specialty drugs-specifically hepatitis C antivirals, fewer than expected new drug approvals, or cost-reduction strategies implemented by providers, such as expanded use of biosimilars.Evidence also suggests that criticism by policymakers and the media may have forced manufacturers to hold price increases below that which was expected. 28The lower-than-forecasted growth also demonstrates the difficulty of accurately predicting future drug spending in the economically and politically volatile environment of healthcare. 29espite some moderation in the rate of growth of specialty drugs in 2015, we still anticipate these drugs to be major contributors to future spending.In 2016, FDA approved 22 novel agents, most of which were considered specialty drugs. 30Among these were notable advances in the treatment of chronic HCV, plaque psoriasis, chronic lymphocytic leukemia, For Personal Use Only.Any commercial use is strictly prohibited.
shown that overall spending on specialty medications in the United States doubled from 2010 through 2015 and contributed 70% to the overall growth of drug expenditures. 31The Office of Inspector General of the U.S. Department of Health and Human Services recently reported that high-cost drugs (mostly specialty drugs and defined as costing >$1,000 per month) accounted for $33 billion (nearly two thirds) of the total drug spend in Medicare Part D catastrophic coverage in 2015, which was 3 times higher than the amount spent in 2010. 32spite the significant contribution of specialty drugs to overall drug expenditures, there are market factors (such as the withdrawal of the 340B program Omnibus guidelines) and barriers that may mitigate growth in hospitals and clinics in the future.Restrictions on access to specialty drugs by manufacturers and payers reduce the number and types of drugs that hospitals and clinics can dispense or administer to their patients, thus reducing expenditures in hospitals and clinics.Of the 44 new drugs approved by FDA in 2015, 28 (63.6%) had some form of restriction on distribution placed by the manufacturers. 33estrictions on access to specialty drugs vary widely by payer and region, but strategy that could reduce clinic expenditures is based on the site of service.Site-of-service restrictions typically involve the payer carving out certain i.v.medications from the medical benefit and then promoting an alternative site of service such as home infusion or redirecting the site of service at the point of prior authorization.Routinely infused therapies such as infliximab and i.v.immunoglobulin were the initial focus of this effort, but payers are now targeting complex therapies such as oncology drugs. 34Examples of these strategies include payers requiring, incentivizing, or recommending patients to use alternative infusion sites or requiring "white bagging"-where the medication is delivered from a specialty pharmacy to the infusion site.EMD Serono has reported that 44% of commercial health plans used at least 1 site-ofservice strategy in 2015, up from 31% in 2014. 35While the growing use of site-of-service restrictions may exert downward pressure on clinic expenditures for injectable drugs in 2017 and beyond, the resulting fragmentation of care may lead to more emergency department visits or hospital admissions for patients requiring urgent infusions.
Biosimilars are also starting to reduce the growth of specialty drug expenditures while expanding access to sarcoma, and multiple sclerosis.Eight of the drugs were approved as "firstin-class," an indication of the innovative nature of the drug, and 9 were approved to treat orphan diseases that affect 200,000 or fewer Americans.While specialty drugs represent an increasing portion of new drug approvals, they also contribute disproportionately to drug spending.Express Scripts reported that specialty drugs accounted for 3 of the top 5 therapeutic categories for expenditures in 2016 (inflammatory conditions, oncology, multiple sclerosis). 23QuintilesIMS has important therapies. 36For example, we found that GCSF expenditures fell by $38 million after 1 year due to the availability of a biosimilar.We expect this trend to continue, especially with anticipated future competition.Although savings with GCSF products bode well for the healthcare system, potential expenditure reductions are much greater for other biosimilar products, such as adalimumab, etanercept, and infliximab.At the time of this analysis, these biosimilar products had either not yet launched or were early in the launch process and therefore had not yet affected expenditures.The U.S. healthcare system is poised for significant savings if the same discount experienced for GCSF products is applied to these 3 biologics, and our future reports will monitor these trends.
Other biosimilars for use in oncology are also promising.Pegfilgrastim, rituximab, bevacizumab, and trastuzumab are consistently among the top 25 drugs by expenditures.Biosimilars for these agents are under development, and approvals for bevacizumab and trastuzumab may occur in 2017. 37- 39However, experience with previous biosimilars would suggest that significant launch delays are likely to occur because of legal patent challenges.
Many specialty drugs are used for cancer care.Fewer oncology drugs were approved in 2016, and the fact that those new agents were for lowfrequency indications likely contributed to the slower drug expenditure growth compared with previous years.Though lower than 2015, growth in clinic drug expenditures in 2016 (11.9%) was partially fueled by the use of immunoncology agents such as nivolumab and pembrolizumab.In 2017, we expect an increase in the number of new oncology drugs approved by FDA, some for diseases with a high incidence such as lung and breast cancers.Specifically, agents such as neratinib and ribociclib are positioned to have a drastic impact on spending.However, because these agents are orally administered, expen- For each drug listed, the expenditures shown are the total for brand and generic products and for various dosage forms.
ditures will affect all sectors, including mail-order pharmacies and clinicbased pharmacies.
Immunoncology agents will continue to significantly influence expenditures in hospitals and clinics.The novel classes of PD-1 and PD-L1 inhibitors have had a multitude of labeling changes after FDA approval.As more indications are added for these agents, it is expected that total expenditures will continue to increase.Durvalumab's expected approval in 2017 will further increase spending on this drug class. 40Nivolumab is currently the expenditure leader in this class because its label was approved for more indications at the time of launch compared with that of pembrolizumab.Interestingly, pembrolizumab expenditures experienced greater growth in the last quarter of 2016 than in previous quarters.That timing coincided with the release of favorable clinical trial results and a subsequent change in the guidelines that positioned pembrolizumab as a first-line option (over nivolumab) in previously untreated non-small-cell lung cancer. 41These events will likely cause pembrolizumab's expenditure growth to exceed that of nivolumab for 2017.
In our 2014 forecast, we reported that antimicrobial expenditures decreased over the previous 10 years. 42ince then the antiinfective space has been dynamic and influenced by approvals for costly medications to treat HCV, national initiatives to decrease bacterial resistance, and efforts to increase stewardship programs in acute care and long-term care settings. 43hile antiinfectives remain 1 of the top therapeutic classes by expenditures, spending continued to diminish in 2016.This may be partly due to efforts to reduce utilization, especially among antibiotics, which have been the target of increasing stewardship efforts in both hospitals and clinics.It has been estimated that half of antibiotics prescribed in hospital settings and one third in primary care clinics are unnecessary. 44,45352 AM J HEALTH-SYST PHARM | VOLUME 74 | 2017   For Personal Use Only.Any commercial use is strictly prohibited.
We previously reported that HCV antivirals experienced 60.8% growth in 2015 compared with 2014.In addition, ledipasvir-sofosbuvir was the top drug overall based on expenditures in 2015, with sofosbuvir as a single agent also in the top 25. 8 However, in 2016, HCV antivirals had reduced expenditures for the first time since 2013. 43ome people had predicted that the number of patients treated, and thus expenditures, would begin to decline in 2017 and beyond. 46The early decline in expenditures may be more related to price reductions as a result of competition created by multiple new HCV drugs on the market.In fact, at least 1 report has confirmed reductions in both unit cost and utilization for HCV drugs. 23It appears that the class may see continued reductions in expenditures in 2017.
Historically, we have seen moderation in drug expenditure growth caused by the increased availability and utilization of generic medications.In the past few years, unexpected price increases of some older generic drugs have disrupted the norm.Such price increases have caused significant hardship for patients, providers, and payers and have attracted attention of legislators and policymakers.The Government Accountability Office reported that while the prices of generic drugs covered under the Medicare Part D program dropped on average from 2010 to 2015, there was a group of 315 drugs that experienced extraordinary price increases during that period. 47Price increases in this group were at least 100% and, in some cases, 1,000% or more.A specific example was that of EpiPen (Mylan).The price hike from $100 to over $600 for a package of 2 epinephrine autoinjectors was the focus of public outcry in 2016, resulting in a federal investigation and a $465 million settlement paid by Mylan on allegations that it overbilled Medicaid. 5,48Doxycycline and glyburide are 2 other examples.In December 2016, the U.S. Department of Justice charged 2 former executives of different generic drug manufactur-ers of conspiring to fix prices and rig bids for doxycycline and glyburide. 49his action was followed by a 20-state federal criminal charge against 6 generic drug makers, alleging that they entered into illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices, and reduce competition for the 2 drugs. 50ocused attention at hospitals has also highlighted concerns of predatory pricing of generic medications.A survey of all U.S. community hospitals found that inpatient drug costs increased 38% per admission in just 3 years and that growth in unit prices was primarily responsible for this increase. 22Price increases appeared to be random, inconsistent, and unpredictable-with hikes occurring for both high-and low-volume drugsbut most were for generic or noninnovator drugs.Others have reported on the impact of generic drug price hikes in the hospital setting. 51Despite these and other examples of generic drug price hikes, generics still contribute to savings in general.In their 2016 Annual Report, the Association for Accessible Medicines (formerly the Generic Pharmaceutical Association) reported that generic drugs are increasing in the contribution to the drug spend and declining in price overall, contributing to $227 billion in savings in 2015. 52verall spending on drugs in the United States is affected by many different factors, the most important of which are changes in the economy, the population, and the healthcare system.Today's tumultuous political climate makes the economy and health policy difficult to predict.While healthcare financing and policy in the United States are uncertain at present, the United States will continue to experience the long-term trend of the aging of its population and the associated increase in healthcare needs and spending.In the drug market, the entry of new products (brand or generic), changes in prices of existing agents, and changes in utilization or patterns of use will also impact drug spending.
Pharmacy leaders must keep abreast of important developments in health policy, health finance, technology, and practice in order to be optimally prepared for changes that may influence practice and thus influence medication spending.The analyses and projections presented here focus on factors likely to influence healthcare spending and prescription drug expenditures in 2017, but pharmacy leaders should carefully monitor other developments that are likely to affect their department budgets in the coming years.Additional guidance on emerging issues that may impact drug spending can be found in the ASHP Foundation Forecast 2017. 53here are many limitations that should be considered when interpreting the results of the analyses conducted and of the forecast for 2017 spending described in this article.A detailed list of limitations is provided as supplementary material online (available at www.ajhp.org).

Conclusion
We project a 6.0-8.0%increase in total drug expenditures across all settings, an 11.0-13.0%increase in clinics, and a 3.0-5.0%increase in hospital drug spending in 2017.Health-system pharmacy leaders should carefully examine their own local drug utilization patterns to determine their own organization's anticipated spending in 2017.

Disclosures
Dr. Schumock   Pembrolizumab received approval for specific patients with metastatic non-small-cell lung cancer (C) during the same time that nivolumab received expanded lung cancer approval (D) and ipilimumab received expanded melanoma approval to include the adjuvant setting (E).Nivolumab received approval for renal cell carcinoma (F), and shortly thereafter pembrolizumab received expanded melanoma approval (G).In the second quarter of 2016, nivolumab received approval for Hodgkin lymphoma (H), and pembrolizumab received approval for metastatic squamous cell carcinoma of the head and neck during the next quarter (I).In the last quarter of 2016, atezolizumab received approval for non-small-cell lung cancer (J), pembrolizumab received expanded approval for non-small-cell lung cancer (K), and nivolumab received approval for metastatic squamous cell carcinoma of the head and neck (L).For Personal Use Only.Any commercial use is strictly prohibited.

Methods
This article examines both historical trends in drug expenditures and expected changes in the drug marketplace that may influence drug expenditures in nonfederal hospitals, clinics, and the overall domestic marketplace for prescription pharmaceuticals, including anticipated new drug approvals and patent expirations.Data for the analysis of historical trends in expenditures were obtained from the QuintilesIMS (previously IMS Health) National Sales Perspectives (NSP) database through December 31 of the previous calendar year.
The NSP is a statistically valid audit that projects 100% of the purchases in every major class of trade and distribution channel for prescription pharmaceuticals, nonprescription products, and select self-administered diagnostic products in the United States, measuring both unit volume and invoice dollars.It is derived from annual transactions from pharmaceutical manufacturers to wholesaler distribution centers for sales to nonfederal hospitals, clinics, retail pharmacies, mail-order pharmacies, home health facilities, long-term care outlets, and other entities.The sectors included in the report were defined as follows: (1) retail pharmacies, which include standalone chain and independent stores, as well as mass merchandisers and food and convenience stores with a licensed pharmacy, (2) mail-order pharmacies, which include licensed mail service pharmacies, including both private sector and federal facilities, (3) clinics, which include physician offices and outpatient clinics, including general, family medicine, and specialty clinics covering oncology, nephrology, dialysis, family planning, orthopedics, and urgent care centers, (4) nonfederal hospitals, which include all nonfederally owned facilities licensed as hospitals, including inpatient treatment and rehabilitation facilities, in addition to general and specialty acute care institutions, (5) long-term care, which includes nursing homes and residential care facilities, (6) federal facilities, which include the Public Health Service and other federal hospitals and U.S. ships at sea (Veterans Health Administration facilities were previously included in analysis of the federal facility sector but data were not available after December 31, 2013), ( 7) home healthcare, which includes licensed home health organizations and visiting nurse entities, (8) staff-model health maintenance organizations (HMOs), which include closed-panel HMO pharmacies and hospitals, union clinics and pharmacies, and workers' compensation clinics, and (9) other, which covers a variety of otherwise unclassified government accounts as well as entities such as jails, prisons, and veterinary hospitals and clinics.
All drug dosage forms were included in the analyses conducted (except where noted), and drug class groupings by therapeutic class were based on QuintilesIMS's proprietary Uniform System of Classification. 1 For all drug expenditure data from NSP, we reported total dollars spent as well as growth, with the latter being the percent change (increase or decrease) in expenditures compared with the previous 12 months.All of the analyses were based on the previous full calendar year.The historical analyses include data on expenditures across all drug distribution channels (e.g., retail, mail order).Within channels, we categorized factors that drive changes in pharmaceutical expenditures into (1) new products, (2) price inflation, and (3) volume and mix.The "new products" category represents growth in expenditures attributable to products that were not on the market in the comparison time period (i.e., previous year)-primarily newly approved and marketed agents.Growth in prescription drug expenditures attributable to price inflation refers to changes in the unit cost of drugs that were previously on the market in the comparison time period (i.e., the change in price from one year to the next).The "volume and mix" category combines changes in volume of utilization of existing products (i.e., changes in the number of users, number of days of therapy, or number of doses of therapy per day) and changes in utilization patterns.An example of mix is when prescribing moves from brand to generic products, resulting in reduced expenditures.The factors influencing growth were also examined across product types, including injectables and noninjectables, brands, generics, and branded generics.
We also examined the top 25 medications based on expenditures and the medications with the greatest growth in expenditures compared with the previous year in nonfederal hospitals, clinics, and overall (all channels or sectors combined).In these analyses, expenditures for each drug were totaled for all brand and generic products and the various dosage forms.Because the primary focus of this forecast was drug expenditures in hospitals and clinics, we analyzed trends in these sectors by therapeutic category.
Each year we also conduct separate analyses of selected drug classes thought likely to significantly influence drug spending in hospitals or clinics.The subject of these focused, or special, analyses varies from year to year.Such analyses have included antimicrobials, antineoplastics, biosimilars, and other important drug classes.
Drug approvals anticipated in the coming year were reviewed, since these were expected to contribute to increased drug expenditures.Drugs and biologics anticipated to be approved by the Food and Drug Administration (FDA) were identified by searching pharmaceutical and biotechnology business news for articles of interest to investors in the pharmaceutical and biotechnology industry.Once products were identified, their Prescription Drug User Fee Act (PDUFA) dates were determined by examining information in official press releases by the respective company sponsoring the drug or biologic.The PDUFA date is the date by which FDA has committed to review and e358 AM J HEALTH-SYST PHARM | VOLUME 74 | 2017   For Personal Use Only.Any commercial use is strictly prohibited.act on 90% of new drug applications (NDAs) or biologic license applications (BLAs).This may be a decision to approve or not approve a drug or biologic. 2,3In the event that no explicit PDUFA date was mentioned in the official press release, the date is extrapolated by adding 6 months (for priority reviews) or 10 months (for standard reviews) to the 60-day NDA or BLA filing date.Drugs or biologics that had negative FDA committee reviews at the time of manuscript preparation were not included.In addition, agents already FDA approved for other indications (without major differences in drug delivery) were also excluded.
In some analyses, we also examined drugs approved under "breakthrough" status.In addition to containing the fifth PDUFA authorization (which spans fiscal years 2013-17), the FDA Safety and Innovation Act of 2012 promoted the expedited approval of innovative medications by allowing FDA to designate certain potential drug candidates as breakthrough therapies. 4The intent of the breakthrough designation is to expedite market approval for agents that show promise for treatment of severe or life-threatening diseases based on preliminary data (e.g., results of Phase I studies).This differs from a fast-track designation in that breakthrough agents are expected to demonstrate substantial improvement over current standards of care.Further, there is greater collaboration between FDA and the drug sponsor for agents reviewed under the breakthrough pathway than for other pathway designations (including fast-track status), and such interaction is essential in determining the most efficient path toward market approval.
Drugs anticipated to lose patent protection in the next year were reviewed to estimate their impact on drug expenditures.Drugs and biologics whose patent protection was expected to end were identified by searching the Internet for pharmaceutical and biotechnology business news articles describing such information.In addition, the list of potential patent expirations published in the previous year was examined to determine if these agents were delayed and expected to lose patent protection in the coming year.The list of potential patent expirations primarily focused on drugs that were substantial expenditures for the entire market or those that were particularly important to the hospital or clinic setting.Data from NSP on generic drug expenditure trends were also analyzed.Special emphasis was placed on generic products likely to have a significant impact on expenditures for the entire market and those of particular importance to the hospital or clinic setting.
Finally, we predicted drug expenditure growth for nonfederal hospitals, clinics, and all settings.These estimates were generated through a combination of quantitative and qualitative analyses, considering all of the trends, new drugs, patent expirations, and other major factors that were believed to influence future drug expenditures, as discussed in this article.Projections from other sources were also examined and considered.These inputs were evaluated by the authors collectively, and a consensus opinion was reached as to the anticipated drug expenditure growth for nonfederal hospitals, clinics, and all sectors combined.Growth was defined as the percent increase in expenditures compared with the previous year and was provided as a range.

Limitations
Our analysis and forecast had several important limitations.The primary source of our drug expenditure trend data was the QuintilesIMS NSP database.While this is a very reliable data set, there were several issues to consider.First, while this database captures greater than 90% of all drug expenditures, the remaining portion was extrapolated to provide estimates for the entire U.S. population.The estimates may not represent exactly the true distribution of drug expen-ditures.However, less than 10% of expenditures for prescription medications were estimated, and this small percerntage was not expected to affect our results.Furthermore, because QuintilesIMS has a robust process to review, verify, and update data, the data that we used in this analysis may be revised in the future.Such revisions could influence the trends we reported and our projections.
Because our estimates of drug expenditures in the previous year were obtained from a specific data source (i.e., the NSP database), they may be different than other such estimates.For example, the Centers for Medicare and Medicaid Services (CMS) publishes an annual report of national healthcare expenditures, which also includes an estimate of drug spending in retail outlets in the United States. 5That estimate is typically considerably lower than what we produce because the QuintilesIMS data include all sectors of the market, not just retail outlets.
Our analysis included information on new drug approvals and patent expirations, most of which came from FDA notices and pharmaceutical company press releases.While we did our best to identify all relevant information, some drugs may have been overlooked.We may have missed drugs that were subjected to the FDA's breakthrough category for drug approvals, which may occur quickly and for which there was no information at the time of manuscript preparation.
Finally, in addition to the limitations in the data and availability of information for our analyses, empirical computation of the expected future change in expenditures was limited and primarily based on the consensus opinion of the authors.Because of the uncertainty of our predictions, the forecasts were expressed in ranges.However, we have analyzed the accuracy of our past predictions, and, while not without error, they have been comparable to the accuracy of annual estimates from CMS. 6 Nevertheless, we caution readers not to blindly use our financial projections as "multipliers" to calculate future expenditures in their health systems.Instead, pharmacy managers should carefully examine their own local data and trends when developing their drug budgets.Other resources should also be used where applicable, such as the ASHP Pharmacy Forecast, which is developed annually. 7oreover, to be effective, efforts to manage drug costs should be planned and executed as a continual process, not just as a brief annual exercise when the budget is prepared and provided to hospital administration.ASHP guidelines for drug cost management further describe the comprehensive approach necessary to effectively manage drug costs. 8With a well-developed and multifaceted drug cost management plan, drug expenditures can be managed with greater confidence and effectiveness.

Table 1 .
Prescription Drug Expenditures and Growth by Sector a

Table 2 .
Factors Driving Growth of Pharmaceutical Expenditures in Clinics and Nonfederal Hospitals in 2016, by Product Category a

Table 3 .
Top 25 Drugs by Expenditures Overall in 2016

Table 6 .
These account for 94.9% of all drug spending in nonfederal hospitals.As in the past, antineoplastic agents were the top category, accounting for 17.5% of the drug spend in hospitals in 2016.Among the e344 AM J HEALTH-SYST PHARM | VOLUME 74 | 2017

Table 4 .
Top 25 Drugs by Expenditures in Clinics in 2016

Table 5 .
Top 25 Drugs by Expenditures in Nonfederal Hospitals in 2016

Table 6 .
Top 25 Therapeutic Drug Categories by Expenditures in Nonfederal Hospitals in 2016

Table 7 .
Selected Drugs and Biologics That Have Received or May Receive FDA-Approved Labeling in 2017 a AM J HEALTH-SYST PHARM | VOLUME 74 | 2017 e349 For Personal Use Only.Any commercial use is strictly prohibited.

Table 7 .
Selected Drugs and Biologics That Have Received or May Receive FDA-Approved Labeling in 2017 a a FDA = Food and Drug Administration, PDUFA = Prescription Drug User Fee Act, Q = quarter.b Extrapolated based on new drug application submission date and review status (i.e., 10 months for standard review and 6 months for priority review).

Table 8 .
Selected Potential Patent Expirations for 2017 AM J HEALTH-SYST PHARM | VOLUME 74 | 2017 e351 For Personal Use Only.Any commercial use is strictly prohibited.

Table 9 .
Top 15 Older Agents With High Growth in 2016 Expenditures Within Nonfederal Hospitals and Clinics J HEALTH-SYST PHARM | VOLUME 74 | 2017 e353 For Personal Use Only.Any commercial use is strictly prohibited.The statements, findings, conclusions, and views contained and expressed herein are those of the authors and do not necessarily represent the views of ASHP, the U.S. government, the Department of Veterans Affairs, or QuintilesIMS or any of its affiliated or subsidiary entities.AM J HEALTH-SYST PHARM | VOLUME 74 | 2017 e355 For Personal Use Only.Any commercial use is strictly prohibited. AM

eTable 1 .
Top 20 Antineoplastic Drugs by Expenditures in Clinics in 2016