The report, 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 approximately 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,” said Murray Aitken, IMS Health senior vice president 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.”
In its latest study, the IMS Institute highlights the following findings:
- Global medicine use in 2020 will reach 4.5 trillion doses, up 24 percent 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 (OTC) 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 spending will grow by 29-32 percent through 2020, compared with an increase of 35 percent 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. Brand 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. 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.
- 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 U.S., rising from 88 percent to 91-92 percent of all prescriptions dispensed by 2020. Spending on medicines in the U.S. 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 (ACA) will continue to have an effect on medicine spending during the next five years largely due to expanded insurance coverage. 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.
- 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.
About the IMS Institute for Healthcare Informatics
The IMS Institute for Healthcare Informatics provides key policy setters and decision makers in the global health sector with unique and transformational insights into healthcare dynamics derived from granular analysis of information. It is a research-driven entity with a worldwide reach that collaborates with external healthcare experts from across academia and the public and private sectors to objectively apply IMS Health’s proprietary global information and analytical assets. More information about the IMS Institute can be found at: http://www.theimsinstitute.org.
This analysis of medicine spending is based on prices reported in IMS Health audits of pharmaceutical spending, which are in general reported at the invoice prices wholesalers charge to their customers including pharmacies and hospitals. In some countries these prices are exclusive of discounts and rebates paid to governments, private insurers or the specific purchasers. In other countries, off-invoice discounts are illegal and do not occur. The mix of true prices and opaque pre-discounted prices means the analyses in this report do not reflect the net revenues of pharmaceutical manufacturers. As a part of this report, the IMS Institute has compared IMS Health audited spending data to reported sales, net of discounts, reported by publicly traded companies and made estimates of future off-invoice discounts and rebates and their impact on the growth of branded medicines. Analyses in this report refer to IMS Health’s proprietary databases and services including Market Prognosis, Therapy Prognosis and R&D Focus; and proprietary definitions and methodologies including Specialty pharmaceuticals, IMS Innovation Insights and Pharmerging markets. See appendices under Definitions & Methodologies for more detail on methodologies used throughout this report.