The IQVIA Institute for Human Data Science published its Study on Global Medicine Spending. One of the findings is that total drug spending is expected to climb to more than $1.5 trillion by 2023. That’s a 50 percent increase from 2014.
The IQVIA Institute for Human Data Science published its Study on Global Medicine Spending. One of the findings is that total drug spending is expected to climb to more than $1.5 trillion by 2023. That’s a 50 percent increase from 2014.
The key drivers are the United States and what they call “pharmerging markets.” They are expected to have compound annual growth rates of 4 to 7 percent and 5 to 8 percent, respectively.
In the U.S., spending growth is primarily driven by new product updates and brand pricing. It is offset by patent expirations and generic drug sales.
Drug spending in Japan was $86 billion in 2018, but drug spending is actually expected to drop by 3 to 0 percent through 2023, mostly the result of exchange rates and generic uptake.
Europe is also projected to have slower growth of 1 to 4 percent compared to 4.7 percent compound annual growth rate over the past five years because of cost-containment measures and slower new product growth.
China, generally viewed as an enormous growing market, is expected to slow spending on drugs to 3 to 6 percent compound annual growth rate over the next five years.
Across all developed markets, new products and patent losses will be key factors. The report indicates that product mix will shift to specialty and orphan products. About 54 new active substance (NAS) launches are projected per year over the next five years. Two-thirds of those will be specialty products, driving the specialty share spending to almost 50 percent by 2023 in most developed markets.
But the industry will continue to be slammed by patent cliffs, with the impact of losses to be $121 billion between 2019 and 2023. About 80 percent of that will be in the U.S., or about $95 billion.
“By 2023,” the report notes, “biosimilar competition in the biologics market will be nearly three-times larger than it is today. This will result in approximately $160 billion in lower spending over the next five years than it would have if biosimilars did not enter the market.”
The report also looks at 10 areas to watch from 2019 to 2023. They include: patient engagement, digital therapeutics, AI and machine learning, real-world evidence, emerging biopharma companies, pricing reforms, prescription opioids, margin pressures, neglected tropical diseases, and advanced therapies.
For example, the report indicates that emerging biopharma companies will account for more than one-third of drugs launched in the next five years. But they—as is most of the industry—carefully watching what governments are doing about drug prices. The report states, “In response to stakeholder perceptions in the United States that they are paying inappropriately high costs for medicines, the federal government has proposed a sweeping set of pricing reforms for government programs with varying levels of impact and probability of being enacted.”
The report notes that the median list price for oncology and orphan drugs could exceed $200,000 per year by 2023.
Another area where government policy is likely to have an effect is on prescription opioids. The report states, “A range of likely scenarios around opioid prescribing trends include a continuation of the ongoing rapid declines in use, or a pattern of convergence at the levels of current lower-use states.”
