U.S. Rx drug spending expected to slow through 2017

November 19, 2013

Total global spending on prescription medicines will increase by between $205 and $235 billion from 2012 through 2017, reaching more than $1 trillion in 2017, according to a study released Nov. 19.

Total global spending on prescription medicines will increase by between $205 and $235 billion from 2012 through 2017, reaching more than $1 trillion in 2017, according to a study released Nov. 19.

The level of increase will likely be lower than the $234 billion hike in global spending from 2006 through 2011, according to “The Global Use of Medicines: Outlook through 2017”report by the IMS Institute for Healthcare Informatics. Growth in global spending on medicines increased at a modest rate of 2.6% to $965 billion in 2012, and is forecast to grow at a 3% to 6% compounded annual rate over the next five years.

Lower global spending in 2012 and beyond is caused by “the combination of billions of dollars of spending from products going off patent, slow economic recovery around the world-and the constraints on overall spending that has prompted-offset by growth in emerging markets,” Michael Kleinrock, director of marketing insights for IMS, said on a media conference call.

Meanwhile, the effects of the Affordable Care Act on prescription spending in the United States over the next four years remains uncertain, according to Kleinrock. “[With the] remaining uncertainty around enrollment and the pace of change around healthcare delivery and enrollment, we could have the emergence of a couple different scenarios: we could see the reforms work and we could see a change to a system that encourages prevention rather than treatment. We could see patients using healthcare where they need it…at a lower price,” Kleinrock said.

“At the other end of the spectrum, you could see the costs of the healthcare system continue to rise and the costs pushed to patients either through rising insurance premiums or through all manners of their treatment, which could [cause] patients to stay away from their doctors and healthcare altogether. There is a stark choice in the U.S. healthcare system, and it is really unclear which way it will swing,” Kleinrock added.

While the developed markets of North America, Europe, and Japan will see very modest single-digit medicine spending growth, many emerging markets will realize much higher, double-digit growth rates “due to a combination of economic growth, demographic and epidemiologic changes, and improved state and private insurance funding for healthcare and medicines,” the IMS report stated.

“We are seeing a change in the availability of treatments in emerging markets. For the most part, research and development [departments] at pharmaceutical companies are releasing treatments for the developing world…and not the developed worlds,” Kleinrock said.