IMS: U.S. Prescription Drug Spending Jumped 13% in 2014

The Gilmer Free Press

TRENTON, NJ — U.S. spending on prescription drugs soared last year, driven up primarily by costly breakthrough medicines, manufacturer price hikes and a surge from millions of people newly insured due to the Affordable Care Act.

Spending rose 13%, the biggest jump since 2001, to a total of $374 billion, according to a report just released by the IMS Institute for Healthcare Informatics. After accounting for population growth and inflation, the increase equaled 10%.

A record 4.3 billion prescriptions were filled in 2014, many of them for inexpensive generic pills going to patients now insured through Medicaid in states that expanded eligibility for the government health program for the poor and disabled. The number of prescriptions covered by Medicaid rose by nearly 17%, and that increase accounted for 70% of growth in the number of prescriptions filled at retail pharmacies. Another sign of the Affordable Care Ac’s impact was that prescriptions paid for in cash, normally filled by uninsured people, declined 5.5%.

The higher spending, though, was mostly due to the many recent drugs with eye-popping price tags: tens of thousands of dollars for a year or course of treatment.

Last year saw an unusually high 42 novel medicines launched, 18 for rare diseases, those that affect fewer than 200,000 Americans. Ten of the new drugs were designated as breakthrough therapies, for conditions including multiple sclerosis, various cancers and hepatitis C.

Altogether, spending on prescription medicines in the U.S. rose by $43.4 billion last year, including about $10 billion due to price increases and $20.3 billion spent on prescriptions for new drugs.

That included a combined $11.3 billion spent on just four new medicines for hepatitis C, a liver-damaging virus so tough to eliminate that until recently, patients had to endure flu-like symptoms and other awful side effects for nearly a year, yet barely 60% were cured.

The new hepatitis C treatments cure upward of 90%, usually in 12 weeks. However, they carry list prices of $84,000 or more for a course of treatment.

One of them, Sovaldi, was launched at the end of 2013 yet was the top-selling drug last year. It brought maker Gilead Sciences Inc. $7.9 billion.

Specialty medicines — drugs for complex, chronic and often expensive disorders including hepatitis C — last year accounted for a full third of prescription spending. That’s a likely harbinger of even higher prescription spending in years in the future.

The 2014 spending growth was somewhat restrained by insurers’ efforts to hold down their costs. More and more insurance companies have been shifting patients into plans that include high copayments for medicines, as well as large deductibles that must be met before insurance coverage kicks in.

IMS said that led to more prescriptions being abandoned at the pharmacy counters by patients who couldn’t afford their portion of the cost. That ultimately resulted in 8.4 million fewer prescriptions being filled at retail pharmacies in 2014, compared to 2013, by patients who were commercially insured, either through their employer or a new health exchange plan.

The IMS figures are based on list prices for brand-name drugs, though wholesalers usually get discounts and rebates amounting to about 6%. Generic drugs, which are often as much as 90% cheaper than the brand-name drugs they copy, don’t come with such large markdowns.

Last year, there were far fewer new generic drugs than in recent years, so generics reduced spending by only $11.9 billion, compared to the peak level of $30.7 billion in 2012.

U.S. prescription drug spending at a glance

Some figures on prescription medicine spending trends:

U.S. PRESCRIPTION SPENDING, 2014: $373.9 billion

U.S. PRESCRIPTION SPENDING, 2013: $330.5 billion

U.S. PRESCRIPTIONS DISPENSED, 2014: 4.33 billion

U.S. PRESCRIPTIONS DISPENSED, 2013: 4.24 billion

TOP DRUG TYPES BY PRESCRIPTION, 2014: Blood pressure, mental health, pain, antibacterials, cholesterol/blood fats, diabetes.

TOP DRUG TYPES BY SALES LEVEL, 2014: Cancer, diabetes, mental health, immune disorders, respiratory conditions, pain.

TOP DRUGS BY SALES, 2014: Sovaldi (hepatitis C), $7.9 billion; Abilify (schizophrenia), $7.8 billion; Humira (immune disorders), $7.2 billion; Nexium (severe heartburn), $5.9 billion; Crestor (cholesterol), $5.8 billion; Enbrel (immune disorders), $5.5 billion.

~~  Source: IMS Institute for Healthcare Informatics ~~

Stock Market - 04.20.15

The Gilmer Free Press

Equities rallied on Monday, rebounding from Friday’s sell-off and buoyed by the latest stimulus measures out of China.

The Dow recovered its year-to-date gains, while the S&P 500 had its best day of the month so far.

Hasbro (HAS) was the best performer on the S&P 500 after reporting a solid quarter thanks to sales of its Transformers toys.

Royal Caribbean (RCL) was the worst performer on the S&P 500 after cutting full-year earnings guidance on a stronger dollar and higher expenses.

The technology sector was the market leader Monday with high-momentum large-caps the biggest winners.

Among them, Apple (AAPL) added 2.3% and Google (GOOGL) jumped 2.2%.

NEW YORK, NY — The stock market bounced back from a big loss on Friday after getting a boost from some good first-quarter earnings reports.

Toy maker Hasbro reported an unexpected gain in sales on the back of strong demand for its Transformer, Nerf and Marvel toys. Oil and gas services company Halliburton and investment bank Morgan Stanley also reported results that we’re better than analysts were expecting.

Stocks were recovering from a big slump on Friday when worries about the unresolved Greek debt crisis and some disappointing earnings reports rattled financial markets.

This week is one of the busiest for first-quarter earnings with 147 companies, close to one-third of those in the S&P 500, scheduled to report their results. Investors are already expecting weak earnings because a surge in the dollar is hurting overseas sales. A big drop in oil prices is also hitting energy companies.

The strong earnings Monday “are setting a good trend to start the week,“ said David Lyon, a global investment specialist at JPMorgan Private Bank. “Earnings are coming in better than the weakened expectations.“

The Standard & Poor’s 500 index climbed 19.22 points, or 0.9%, to 2,100.40. The Dow Jones industrial average gained 208.63 points, or 1.2%, to 18,034.93. The Nasdaq composite climbed 62.79 points, or 1.3%, to 4,994.60.

Currently, analysts are predicting earnings per share will slide by an average of 2.6% for S&P 500 companies in the first quarter, according to S&P Capital IQ data. If that forecast holds, it will mark the first period that earnings have contracted since the third quarter of 2009, when the U.S. was emerging from the Great Recession.

On Monday, though, the reports were better than forecast.

Hasbro was the biggest gainer in the S&P 500 index after reporting better-than-expected earnings. The company is battling a shift toward video gaming, but unexpectedly reported rising revenue for the first quarter. The stock jumped $8.27, or 13%, to $74.16.

Halliburton was another company to gain after posting earnings that beat expectations.

The company reported a $643 million loss for the first quarter, but after asset write-offs, severance costs and other items had been accounted for, the company logged earnings per share of 49 cents. Halliburton’s stock rose 96 cents, or 2%, to $47.85.

Stocks have moved between big upswings and losses for much of the year, and the S&P 500 has gained only 2% so far in 2015.

Not all investors are positive on the near-term outlook for stocks. Michael Scanlon, a senior investment analyst at John Hancock Asset Management, says stocks will likely continue to struggle to advance as long as the debt situation in Greece remains unresolved and earnings at U.S. companies remain weak.

“I feel like the first half of this year ... is going to turn out to be a pretty bumpy period for equities,“ said Scanlon.

In government bond trading, prices edged lower. The yield on the benchmark 10-year Treasury note rose to 1.88% from 1.86% on Friday.

In currency trading, the euro weakened to $1.0737 from $1.0805 on Friday. The dollar rose to 119.24 yen from 118.94 yen

U.S. crude oil rose 64 cents to close at $56.38 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, was unchanged at $63.45 a barrel in London.

In metals trading, silver fell 34 cents, or 2.1%, to $15.89 an ounce. Gold dropped $9.40, or 0.8%, to $1,193.50 an ounce. Copper also dropped, falling 4.2 cents, or 1.5%, to $2.73 a pound.

In other futures trading on the NYMEX:

— Wholesale gasoline rose 1.6 cents to close at $1.932 a gallon.

— Heating oil fell 0.5 cent to close at $1.877 a gallon.

— Natural gas fell 9.8 cents to close at $2.536 per 1,000 cubic feet.

Don’t Panic, College Seniors: Jobs for Grads Likely To Grow

The Gilmer Free Press

WASHINGTON, D.C. — The consulting and accounting firm EY is aggressively recruiting on college campuses this spring. The company formerly known as Ernst & Young plans to hire 9,000 graduates from U.S. universities this year, up from 7,500 in 2014. But recruiting isn’t as easy as it used to be.

“I’m seeing a lot more competition” from rival employers, says Dan Black, EY’s Americas recruiting leader.

That’s good news for college seniors and graduate students preparing to accept diplomas this spring, and a sign that new graduates will fare better than they did in 2014. The Labor Department reported on Thursday that the unemployment rate for Americans in their 20s who received a four-year or advanced degree last year rose to 12.4% from 10.9% in 2013.

“This is a real breakout year,“ said Philip Gardner, director of Michigan State University’s Collegiate Employment Research Institute.

In a survey of employers last fall, the employment center found that hiring of graduates with four-year degrees will rise 16% this year.

“It’s led by the ones you would expect — engineering and business,“ Gardner said. “But there seems to be a lot of room for everybody… Even arts and humanities are making a comeback.“

Employers have more openings to fill because Baby Boomers are retiring and more workers are feeling confident enough about the economy to switch jobs. Overall, the United States generated 3.1 million jobs last year, the most since 1999. The overall unemployment rate has fallen to 5.5% in March from 6.7% at the end of 2013.

Tyler Etten, 22, had a $54,000-a-year job in finance waiting for him when he graduated from Iowa State University in May 2014. Three months later, he bounced to an even better job with the investment firm Piper Jaffray in Minneapolis. His 3.5 grade point average helped. But Etten says he set himself apart by getting internships, participating in campus clubs and spending his spare time learning financial modeling and advanced Excel skills.

“A degree is not enough with record amounts of people graduating from college,“ he said.

In particular, employer demand for so-called STEM graduates — in science, technology, engineering and mathematics — is high.

“We can’t graduate enough engineers,“ said Holly Proffitt, employer relations coordinator in the career services office at Arkansas State University.

Still, many recent college grads are struggling and have yet to enjoy a full recovery from the dark days of the Great Recession.

In a report last year, researchers at the Federal Reserve Bank of San Francisco found that wages for recent college graduates haven’t kept up with overall wages since the Great Recession. Between 2007 and 2014, median wages for all full-time workers rose 15%. For recent college grads, they rose just 6%. The same thing happened after the 2001 recession: College grads’ wages lagged behind everyone else’s as the economy recovered, the report said.

The Michigan State survey found that 62% of employers were planning to keep starting wages flat for college grads compared to last year; 37% planned to increase starting salaries. The increases tended to range from 3% to 5%.

Elizabeth Earl, 22, landed a job at a health care trade publication after graduating from Columbia College Chicago in December. The pay is low and the work tedious, but she’s relieved she has a job.

“By the time you get out, you assume you’ll be a barista,“ she said. “It’s not idyllic nor at all what I want to do, but it is a job from which I can be getting paid while I consider career paths.“

Josh Kelly, 23, is hoping to break into radio or journalism after graduating from Rutgers University in January. In the meantime, he’s working at a record store and living with five people in New Brunswick, New Jersey. The job search has proven frustrating, even though he had an internship with a radio company and was president of a student-run radio station.

Kelly said he was disheartened to learn that many companies use algorithms to scan resumes for particular keywords. He thought human recruiters were reviewing his applications, “yet now the picture seems to be that most hiring agents don’t necessarily see my resume at all.“

G-Fin™: U.S.A.: Economic Brief – 04.17.15

The Gilmer Free Press

Real Earnings

Real average hourly earnings increased by 0.1% in March, seasonally adjusted.

Average hourly earnings increased by 0.3% and the CPI-U increased by 0.2%.

Real average weekly earnings decreased by 0.2% over the month.

Consumer Price Index

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers rose 0.2% in March, the same increase as in February.

The index for all items less food and energy rose 0.2% in March, also the same increase as in February.

Producer Price Index

The Producer Price Index for final demand increased 0.2% in March.

Final demand prices moved down 0.5% in February and 0.8% in January.

In March, the index for final demand goods advanced 0.3% and prices for final demand services rose 0.1%.

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