It's a perfect storm for drug spending this year: fewer pharmaceutical patents are expiring in 2014, and Obamacare is making drugs more affordable to more people. The upshot: nearly 12 percent increase in drug spending by year-end in the United States.
That's what a report from the IMS Institute for Healthcare Informatics says. Worldwide, drug sales spiked this year, recording an increase in absolute growth from $40 billion in 2013 to $70 billion. The extra driver of the Patient Protection and Affordable Care Act put the U.S. in the driver's seat of the uptick.
"Among the major markets, the United States remains the largest, representing over one-third of the global total, and is expected to grow at a compound annual growth rate of 5-8 percent through 2018," the report said. "This is significantly higher than the 3.6 percent growth over the past five years."
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Following the spike this year, the study forecast a cooling off of the trajectory — but sales will still be stronger than the previous five years. Meantime, as new drugs to treat diseases like hepatitis C and diabetes are expected to come on the market, developing nations will become larger players as they "account for nearly 50 percent of absolute growth in 2018," the study said.
Other factors besides PPACA and fewer expiring patents contributed to the U.S.'s high spending this year. "An unusually high level of spending on new products is coinciding with an unusually low reduction in the use of brands associated with new generic entrants. Price increases also contribute to U.S. market growth, unlike other countries, though much of these increases are not realized by manufacturers due to rebates and discounts."
The study offered these highlights as well:
- Of developed markets, the U.S. will see the largest per capita spending increase from 2013 to 2018, while other developed countries such as France and Spain will see a decrease due to implementation of policies to control spending growth.
- Global spending growth will peak in 2014-15 and will moderate through 2018, due to fewer patent expiries, launches of more innovative medicines and price increases.
- Off-invoice rebates and discounts will help decrease net sales growth in both developed and pharmerging markets through 2018.
- Global spending growth will stabilize between 4-7 percent through 2018.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
