Global Drug Spending Forecast: $1.4 Trillion by 2020

Megan Brooks

November 18, 2015

Global spending on medicine will increase roughly 30% in the next 5 years, reaching $1.4 trillion by 2020, according to projections from the IMS Institute for Healthcare Informatics released today.

That is up about $349 billion from 2015 spending, and almost double the increase from 2011 through 2015 ($182 billion).

The biggest drivers of spending growth are greater access to medicines, particularly in low- and middle-income countries (including cheaper drugs), and innovation in medicine, according to the report, "Global Medicines Use in 2020: Outlook and Implications."

Increased innovation, access to cheaper medicines, and technology will drive "unprecedented healthcare value," the IMS Institute said in a news release.

Thanks in large part to generics, the "use gap" between developed nations and emerging markets will narrow considerably during the next 5 years, the report predicts.

"By 2020, more than half of the world's population will live in countries where medicine use will exceed 1 dose per person per day," up from 31% in 2005, Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics, said during a press briefing.

Global medicine use in 2020 will reach 4.5 trillion doses, an increase of 24% from 2015, he noted.

Most of the global increase in use of medicines during the next 5 years will happen in "pharmerging" markets, with India, China, Brazil, and Indonesia representing nearly half of that growth, the report predicts. The volume of medicine use in developed markets will hold relatively stable.

Spending on brand name drugs in developed markets will increase 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 discounts and rebates, the report notes. Patent expiries are expected to fuel $178 billion in reduced spending on branded products, including $41 billion in savings on biologics as biosimilars become more widely adopted, it notes.

Generics, nonoriginal branded, and over-the-counter products will make up 88% of total medicine use in pharmerging markets by 2020 and will provide the biggest contribution to increased access to medicines in those countries, according to the report.

In the United States, generic drugs will continue to make up the vast majority of prescription drug usage, rising from 88% now to 91% to 92% of all prescriptions dispensed by 2020.

Spending on medicines in the United States will reach $560 to 590 billion on an invoice price basis, for a 34% increase in spending during 2015, the report says. It forecasts annual price increases on branded drugs on a net basis in the range of 5% to 7%.

Bigger Bang for the Buck

"We're seeing a surge of innovation, with 225 new molecular entities that we are forecasting will launch between now and 2020," Aitken said. Roughly a third of them will be for cancer. "This is further evidence of the strength of the pipeline with respect to bringing clinically differentiated and new medicines to market not only in cancer but also in hepatitis C, autoimmune disorders, heart disease, and a wide array of rare diseases as well," he said. The report predicts 75 new orphan drugs for rare diseases by 2020.

The report also highlights the growing role that technology will play in medicine in 2020, Aitken said. Specifically, in "enabling more rapid changes to treatment protocols, increasing patient engagement and accountability, in shifting the patient-provider interaction, and accelerating the adoption of behaviors that result in patients being more adherent to treatments," he noted.

"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," the IMS Institute notes in their news release.

"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," Aiken added.

"Global Medicines Use in 2020: Outlook and Implications." IMS Institute for Healthcare Informatics. Published November 18, 2015. Summary

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