US drug spending predicted to drop
The US growth rate for spending on medicines is expected to fall in 2016 and beyond, according to new research.
The US market growth rate will decline by half, from 12% in 2015 to between 6% and 7% this year, while prescription drug spending is forecast to grow 6% to 9% through 2021, according to a new QuintilesIMSInstitute report, “Outlook for Global Medicines Through 2021: Balancing Cost and Value”.
“The decline reflects the end of Hepatitis C treatment-driven growth and greater impact of patent expiries—including the introduction of biosimilars—following a period in which fewer brands faced new generic competition,” said QuintilesIMSInstitute in a press statement. Plus, US growth in 2014 and 2015 was driven by historically high price increases for both brand drugs and generics.
Related: Top 7 new facts about drug spending
US prescription drug costs will be driven by the use of transformative specialty brands and invoice price increases, offset by rebates and the use of lower-cost generics. “Brand prices will increase at 8% to 11%—more slowly than the 12% to 15% in the past 3 years, and with fewer outlier major price increases, as these have become unsustainable in light of high-profile media and political attention,” QuintilesIMSInstitute said.
In other good news for prescribers and pharmacists, patient out-of-pocket costs are forecast to decline, despite rising brand prescription costs, as patients shift to newly-available generics and receive co-pay assistance for brands. Notably, more than one-third of prescriptions will have no out-of-pocket costs, the report said. “Free prescriptions are a growing trend, as some patients receive preventive services under the Affordable Care Act, under expanded eligibility for Medicaid and through some insurance plans.”
While US spending is increasing at a slower rate, total global spending on medicines is forecast to spike 33% to reach $1.5 trillion by 2021. Still, global drug spending will grow at a slower compound annual rate of between 4% and 7% during the next five years, down from the nearly 9% growth level in 2014 and 2015.
“While historically large numbers of high-quality new medicines will emerge from the R&D pipeline in the next five years, pricing and market access pressures, lower volume growth in pharmerging markets and greater savings from patent expiries will contribute to the lower rate of growth,” QuintilesIMSInstitute said.
Innovation in specialty medicines will continue to lift the share of global spending from 30% in 2016 to 35% in 2021, driven by the adoption of new breakthrough medicines.
Still, the outlook for medicine spending growth reflects “a more sustainable level for health systems, following the unexpectedly high growth seen in recent years,” said Murray Aitken, senior vice president and executive director of the QuintilesIMS Institute. “At the same time, the astonishing level of scientific advances for disease treatments inevitably will place ongoing pressure on funding for medicines—requiring value-based assessments that balance patient needs and pricing levels with competing healthcare priorities.”
Read more: Health costs rise for diabetes patients