There’s a major caveat to all the new drugs we’re approving

In the past few years, the US has approved a bunch of new, innovative drugs that tend to work better than ever before.

But that’s not coming without a higher cost. According to a report published Thursday by the IMS Institute for Healthcare Informatics, total US spending on drugs (the amount paid to distributors by hospitals and pharmacies, so not necessarily what patients are paying) increased by 12.2% in 2015 from the previous year to about $425 billion.

And of that spending growth was largely driven by new medications that came out in the last two years. That includes new cancer treatments, diabetes care, as well as hepatitis C cures.

Here’s a chart of that spending growth

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Newer, more costly medications like those for hepatitis C and cancer treatments have come under fire in the past few years for their high drug prices. The argument is that because these drugs are so effective, the higher list price is justified as a way to recoup the investment of time and money it took to make these drugs, though that’s not necessarily the whole story.

Notably, branded drugs that are still under patent protection (and thus don’t face generic competition) showed a slower net price growth than previous years. Net price growth refers to what drug companies take in after discounts, rebates, etc. are accounted for.

“It reflects a shift in market dynamics. Drug manufacturers are accepting lower price increases on existing products, and, in some cases, there’s heightened competition,” IMS Institute executive director Murray Aitken told Stat News.

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