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Global drug spending to climb steadily

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IMS report forecasts worldwide surge in medication usage through 2020

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DANBURY, Conn. — More than half of the world’s population will live in countries where medicine use will exceed one dose per person per day by 2020, up from 31% a decade ago, as the “medicine use gap” between developed and pharmerging markets narrows, the IMS Institute for Healthcare Informatics projects.

Global drug spending is forecast to reach $1.4 trillion by 2020 due to greater patient access to chronic disease treatments and breakthrough innovations in drug therapies, according to IMS’ “Global Medicines Use in 2020: Outlook and Implications” report. Global spending is expected to increase at a 4% to 7% compound annual rate over the next five years.

The report found that total global spend for pharmaceuticals will increase by $349 billion on a constant-dollar basis, compared with $182 billion during the past five years. Spending is measured at the ex-manufacturer level before adjusting for rebates, discounts, taxes and other adjustments that affect net sales received by manufacturers. The impact of these factors is estimated to reduce growth by $90 billion, or approximately 25% of the growth forecast through 2020.

“During the next five years, we expect to see a surge of innovative medicines emerging from R&D pipelines as well as technology-enabled advances that will deliver measurable improvements to health outcomes,” Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics, said in a statement. “With unprecedented treatment options, greater availability of low-cost drugs and better use of evidence to inform decision making, stakeholders around the world can expect to get more ‘bang for their medicine buck’ in 2020 than ever before.”

In its latest study, IMS Health finds that global medicine use in 2020 will reach 4.5 trillion doses, up 24% from 2015. Most of the global increase in use of medicines over the next five years will take place in pharmerging markets, with India, China, Brazil and Indonesia representing nearly half of that growth.

“Volumes in developed markets will remain relatively stable and trend toward original branded products as use of specialty medicines becomes more widespread. Generics, non-original branded and over-the-counter products will account for 88% of total medicine use in pharmerging markets by 2020 and provide the greatest contribution to increased access to medicines in those countries,” the analysis stated. “Newer specialty medicines, which typically have low adoption rates in pharmerging countries lacking the necessary health care infrastructure, will represent less than 1% of the total volume in those markets.”

The study projects that global spending will grow by 29% to 32% through 2020, compared with an increase of 35% in the prior five years. Spending levels will be driven by branded drugs primarily in developed markets along with the greater use of generics in pharmerging markets—offset by the impact of patent expiries.

Branded drug spending in developed markets will rise by $298 billion as new products are launched and as price increases are applied in the U.S., most of which will be offset by off-invoice discounts and rebates, the study points out. It says that patent expirations are expected to result in $178 billion in reduced spending on branded products, including $41 billion in savings on biologics as biosimilars become more widely adopted.

“Many of the newest treatments are specialty medicines used to address chronic, rare or genetic diseases and yielding significant clinical value. By 2020, global spending on these medicines is expected to reach 28% of the total,” the report said.

The institute estimates that more than 90% of U.S. medicines will be dispensed as generics by 2020. “Generic medicines will continue to provide the vast majority of the prescription drug usage in the U.S., rising from 88% to 91% to 92% of all prescriptions dispensed by 2020. Spending on medicines in the U.S. will reach $560 billion to $590 billion, a 34% increase in spending over 2015 on an invoice price basis,” according to the study. “While invoice price growth — which does not reflect discounts and rebates received by payers — is expected to continue at historic levels during the next five years, net price trends for protected brands will remain constrained by payers and competition, resulting in 5% to 7% annual price increases. The impact of the Affordable Care Act will continue to have an effect on medicine spending during the next five years, largely due to expanded insurance coverage.”

The report predicts that by 2020 there will be broad adoption of ACA provisions that encourage greater care coordination and movement of at least one-third of spending to an outcomes or performance basis.

Over 225 medicines will be introduced by 2020, with a third focused on treating cancer, according to the study. Disease treatments in 2020 will be transformed by the increased number and quality of new drugs in clusters of innovation around cancer, hepatitis C, autoimmune disorders, heart disease and an array of rare ­diseases.


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