Prescription drug spending in U.S. set to increase by 22%

Annual spending on prescription medicines across the nation will increase by 22 percent over the next five years, according to a new report.

As the price of new drugs continues to climb, so does consumer spending on medicines for cancer, infections and the like. In 2015, overall spending on prescription medicines increased to almost $425 billion, a 12.2 percent rise, reported the Wall Street Journal.

These figures come from annual data released by the IMS Health Institute. According to the report, manufacturers made an estimated $309.5 billion on these prescription sales last year, after rebates and other price breaks. Up 8.5 percent from 2014, that number comes amidst growing criticism from consumers, doctors and politicians concerning climbing drug prices.

Moreover, the report estimates that annual spending will increase by 22 percent to as much as $400 billion by 2020, reported Reuters. Over the next four to five years, that would represent a 4 to 7 percent annual growth rate. When using wholesale pricing, that figure could even be as high as $640 billion in 2020 - a 46 percent rise.

According to the report, branded drugs rang up an average net price increase of 2.8 percent last year, compared to the 12.4 percent when using wholesale prices.

"That reflects the new dynamics in the marketplace, where we have heightened competition in several major therapy areas, including diabetes, with manufacturers taking price concessions through rebates," said Murray Aitken, executive director of IMS Institute for Healthcare Informatics.