The Centers for Medicare & Medicaid Services (CMS) released its annual report on national health expenditures late Wednesday afternoon, with U.S. healthcare spending reaching $4.5 trillion last year.

The national spending figure rose 4.1% year-over-year, faster than the 3.2% increase in 2021 but slower than the 10.6% increase in 2020. CMS stated that there was significant growth in Medicaid and private health insurance spending that was somewhat offset by declines in supplemental funding from the federal government related to the COVID-19 pandemic.

The gross domestic product (GDP) of the U.S. rose 9.1%, though the share of GDP devoted to healthcare dropped 17.3%. This is below the record high of 19.5% in 2020 and just shy of the average share of GDP of 17.5% between 2016 and 2019.

Notably, retail prescription drug spending, which had the third-highest spending by type of service or product with a 9% share of the national health expenditures in 2022, increased 8.4% to $405.9 billion.This was faster than the rate in 2021, when spending increased by 6.8%.

CMS attributed the increased rate of spending on retail prescription drugs to growth in Medicare and out-of-pocket spending during the period while Medicaid and private health insurance spending slowed.

This spending growth was also influenced by a faster growth in the number of prescriptions dispensed as well as a 1.2% increase in retail prescription drug prices following four consecutive years of declines.

The fact sheet on annual healthcare spending in America came out one day before CMS released its revised guidance for calculating rebates and invoicing drugmakers that owe rebates to Medicare under the Medicare Prescription Drug Inflation Rebate Program for certain drugs covered under Medicare Part B and Part D. 

The agency detailed 48 prescription drugs for which Part B beneficiary coinsurances may be lower between January 1 and March 31, 2024.

This all comes as the Biden administration moves ahead with its Medicare price negotiations for 10 prescription drugs as part of a statute included in the Inflation Reduction Act passed in the summer of 2022.