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 percent in 2005, as the “medicine use gap” between developed and pharmerging markets narrows, according to research by the IMS Institute for Healthcare Informatics. The institute’s analysts also project that total spending on medicines will reach $1.4 trillion by 2020 due to greater patient access to chronic disease treatments and breakthrough innovations in drug therapies. Global spending is forecast to grow at a 4 to 7 percent compound annual rate over the next five years.
The IMS study, “Global Medicines Use in 2020: Outlook and Implications,” 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 about 25 percent 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,” says Murray Aitken, IMS Health senior VP and executive director of the IMS Institute for Healthcare Informatics. “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.”
According to IMS analysts, global medicine use in 2020 will grow to 4.5 trillion doses, up 24 percent from 2015. Most of the global increase in use of medicines over the next five years is expected to take place in the so-called “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 percent of total medicine use in pharmerging markets by 2020, and provide the greatest contribution to increased access to medicines in those countries. Newer specialty medicines, which typically have low adoption rates in pharmerging countries lacking the necessary healthcare infrastructure, will represent less than one percent of the total volume in those markets.
Global drug spending, the IMS report projects, will grow by 29 to 32 percent through 2020, compared with an increase of 35 percent in the last 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. Brand spending in developed markets will rise by $298 billion as new products are launched and as price increases are applied in the United States, most of which will be offset by off-invoice discounts and rebates. Patent expiries 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 percent of the total.
According to IMS analysts, more than 90 percent 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 United States, growing from 88 percent to 91-92 percent of all prescriptions dispensed by 2020. Overall spending on medicines in the United States will reach $560-$590 billion, a 34 percent increase in spending over 2015 on an invoice price basis. 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 5-7 percent 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. By 2020, broad adoption of ACA provisions will encourage greater care coordination and movement of at least one-third of spending to an outcomes or performance basis.
On the R&D front, IMS analysts believe that more than 225 medicines will be introduced by 2020, with one-third focused on treating cancer. 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. During the next five years, an additional 75 new orphan drugs are expected to be available for dozens of therapeutic areas that currently have limited or no treatment options. By 2020, technology will be enabling more rapid changes to treatment protocols, increasing patient engagement and accountability, shifting patient-provider interaction, and accelerating the adoption of behavior changes that will improve patient adherence to treatments. Every patient with multiple chronic conditions will have the potential to use wearables, mobile apps and other technologies to manage their health, interact with providers, fellow patients and family members. The ubiquity of smartphones, tablets, apps and related wearable devices, as well as electronic medical records and exponentially increasing real-world data volumes, will open new avenues to connect healthcare while offering providers and payers new mechanisms to control costs.
“Over the next five years, we expect to see a surge of innovation emerging from the research and development pipeline, as well as a range of technology-enabled transformations that will expand the evidence-basis for interventions and bring measurable improvements to health outcomes by 2020,” Aitken says. “With unprecedented treatment options, the greatest availability of low-cost drugs, and better use of evidence to inform decision-making about the optimal use of medicines, stakeholders around the world can expect to get more ‘bang for their medicine buck’ in 2020 than ever before.”