Global Drug Spending Forecast to Hit $1.5 Trillion by 2023

Megan Brooks

January 29, 2019

Global spending on medicines reached $1.2 trillion in 2018 and is set to exceed $1.5 trillion by 2023, according to a report released today by the IQVIA Institute for Human Data Science.

The report also forecasts a declining role for prescription opioids in the opioid epidemic, with opioid prescriptions falling by one half to one third (per capita) by 2023 relative to current levels.

Prescription opioid use in the United States peaked in 2011 and then declined for 7 consecutive years, although the rate of decline has varied across states. "It is likely that existing policies, as well as new legislation at both the state and federal levels, will impact opioid prescribing and use through 2023. However, the dynamics around prescription opioid use and issues around illicit drug use and overdose will remain complex and challenging to address," the report states. 

Surge in Innovation, Biosimilars, Specialty Drugs

The IQVIA report, Global Use of Medicine in 2019 and Outlook to 2023: Forecasts and Areas to Watch, was published online today.

In a conference call with reporters, Murray Aitken, executive director of the IQVIA Institute, said the report draws attention to the "remarkable surge" in innovation that is expected to continue to shape the availability and use of medicines over the next 5 years.

The report predicts an average of 54 new product launches each year over the next 5 years, up from an average of 46 annual new drug launches over the past 5 years. That's a "significant lift and a reflection of the quality and quantity of new drugs in clinical development in the industry's pipeline," Aitken said.

The growth coming from new drugs on the market for less than 2 years will average about $46 billion per year over the next 5 years, up from about $43 billion on average over the past 5 years, he said.

At the same time, the report predicts a "significant impact" from drugs coming off patent and other losses of exclusivity, Aitken said.

The impact of losses of exclusivity in developed markets is expected to be $121 billion between now and 2023, with 80% of this impact, or $95 billion, in the United States. By 2023, 18 of the current top-20 branded drugs will be facing generic or biosimilar competition. By 2023, biosimilar competition in the biologics market will be almost three times larger than it is today. This will result in roughly $160 billion in lower spending over the next 5 years than it would have if biosimilars did not enter the market, the report notes.

The report also highlights the impact of specialty medicines, the fastest growing segment of the market, which will account for about 50% of total spending on medicines by 2023 in most developed markets, up from about 42% in 2018. Among the specialty medicines, cancer drugs will contribute just under one third of the total growth in specialty drug spending over the next 5 years.

Areas to Watch

The report also highlights several "areas to watch" over the next 5 years, including the expanding use and new approvals of "next-generation" biotherapeutics. 

Nine cell-based therapies, gene therapies, and regenerative medicines have launched globally, and a growing number of these are in active clinical research across therapy areas from ophthalmology to oncology, the report notes.

These include direct gene replacement and CAR-T therapies, which are associated with significant rates of remission for some blood cancers. A range of other novel technologies using induced pluripotent stem cells (iPSC), CRISPR/Cas9, modified cells, and gene-modification tools are also under development.

"This is going to be an area with a lot of activity over the next 5 years, with a growing number of therapeutics emerging from the pipeline," Aitken said on the call.

Another area to watch is growth in prescription digital therapeutics (DTx), particularly for mental health issues, "which is an important area that in many respects is underserved by existing therapies," said Aitken.

For example, in 2017, reSET from Pear Therapeutics became the first US Food and Drug Administration (FDA)-approved prescription mobile medical application to help treat substance use disorders. It was followed by the reSET-O app for opioid use disorder, which cleared the FDA last year. These are the first of many digital therapeutic apps with novel uses that will hit the US market in the coming years, the report predicts. 

Other areas to watch include global health initiatives and new approaches to address neglected tropical diseases, as well as the expansion of machine learning and artificial intelligence applications.

The increasing number of pharmaceutical companies hiring senior-level specialists in patient affairs and patient advocacy is also noteworthy. Pharmaceutical companies have gradually expanded their business "beyond the pill" to build a stronger value story for payers, the report notes. 

This includes creating support programs to help improve patient outcomes and patient adherence, reach rare patient populations, and facilitate diagnosis and treatment. Companies are also seeking to generate evidence to show they are improving the lives of patients, caregivers, and families. Hiring patient advocacy leaders is one aspect of this trend. "This is not an entirely new trend but it is one that we think will really get some traction over the next 5 years," Aitken said.

The report was produced independently by the IQVIA Institute for Human Data Science as a public service, without industry or government funding.

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