|Send to printer »|
GEN News Highlights : Jul 12, 2012
Drug Spending Will Rebound by 2016
A new report forecasts an uptick in spending for medicines over the next five years, with annual growth rising from 3%–4% this year to 5%–7% by 2016, when total spending is projected to reach almost $1.2 trillion.
IMS Institute for Healthcare Informatics predicts in The Global Use of Medicines: Outlook through 2016 that the growth in annual global spending for medicines will more than double during the period—from $30 billion this year, to $70 billion by 2016—due to sales volume increases in emerging nations and additional spending in developed countries.
“The trillion-dollar spending on medicines we forecast for 2016 represents a rebound in growth that will accentuate the challenges of access and affordability facing those who consume and pay for healthcare around the world,” Murray Aitken, executive director, IMS Institute for Healthcare Informatics, said in a statement.
Among developed nations, the U.S. will remain the world’s largest single drug market, though its share of the world’s drug spending will shrink as spending elsewhere ramps up between 2011 and 2016, the report continues.
Those developed countries should see the lowest annual growth this year, at less than 1% or $3 billion, before rebounding to between $18 billion and $20 billion in annual growth from 2014–16, the IMS report estimates. In all, spending on medicines in developed nations will increase by a total of $60–70 billion from 2011 to 2016, following an increase of $104 billion between 2006 and 2011.
The short-term slow growth reflects a peaking this year in patent expirations, plus increased cost-containment actions by payers, both of which are expected by IMS to constrain spending for branded medicines through 2016, at a growth rate of 0% to 3%. Patent expirations in developed markets, according to The Global Use of Medicines, will yield a five-year “patent dividend” of $106 billion, reflecting reduced brand spending of $127 billion offset by $21 billion in higher generics spending.
Despite the prospect of the highest-ever number of patent expiries, U.S. spending on medicines will grow by between $35 billion and $45 billion over the next five years, representing an average annual growth rate of 1%–4%, according to IMS. Its report attributes the eventual long-term increase to implementation of President Obama’s healthcare overhaul, which is expected to spur introduction to market of new medicines addressing unmet needs as drug makers look to capitalize on the expansion of the patient population covered by insurance.
IMS says new healthcare cost-containment initiatives driven by the austerity needs of cash-strapped governments are expected to contain European medicine spending growth to the 1%–2% range, while Japanese spending will grow between 1% and 4% annually through 2016, slightly lower than the rate during the prior five years, due to biennial price cuts scheduled for 2012, 2014, and 2016.
In emerging markets, however, IMS expects a near-doubling of annual spending on medicines from $194 billion last year to between $345 billion and $375 billion in 2016. Key factors, according to the report, include rising incomes, continued cost-containment by mostly government-run healthcare systems, and new government programs designed to increase access to treatments by limiting patients' exposure to costs and encouraging greater use of medicines.
Those factors are unlikely to benefit branded drug makers since about 83% of the spending increase is expected to come from generics and other products, including over-the-counter medicines, diagnostics, and nontherapeutics.
IMS Institute for Healthcare Informatics—http://www.imshealth.com/portal/site/ims/menuitem.d248e29c86589c9c30e81c033208c22a/?vgnextoid=4d47d1822e678310VgnVCM10000076192ca2RCRD&vgnextchannel=3e382115cc4be210VgnVCM10000071812ca2RCRD&vgnextfmt=default
© 2013 Genetic Engineering & Biotechnology News, All Rights Reserved