High Prices to Swallow

TRENTON, N.J. - As criticism of soaring prescription drug prices in the United States grows, global spending on medicines is expected to rise 3 percent to 6 percent annually for the next five years, according to a new forecast from IMS Health.

The health data firm predicts that global spending will increase by about 30 percent cumulatively, from about $1 trillion now to about $1.3 trillion in 2020, driven by expensive new drugs, price hikes, aging populations, and increased generic drug use in developing countries.

The increase would be higher but for a huge, looming wave of patents for expensive brand-name pills expiring over that stretch, allowing cheaper generic versions to then enter the market.

Here are some key findings from the report, called "Global Medicines Use in 2020: Outlook and Implications."

IMS expects 2020 global sales of brand and generic prescription drugs, plus nonprescription medicines, to total $1.4 trillion, based on list prices. That's up about $349 billion from 2015 spending, nearly double the increase of $182 billion from 2011 through 2015.

The $1.4 trillion will be a record - not surprising, because medicine use and brand-name drug prices tend to increase every year. However, that total will be reduced by $90 billion globally by discounts and rebates not stated on invoices.

Drug manufacturers routinely give insurers and other payers in the United States and Europe such deals in exchange for inclusion and favorable co-payment levels on their formularies of approved prescription drugs.

Different trends in wealthier countries and poor ones will boost medicine spending from 2016 through 2020.

"Globally, it's all about expanding access in low- and middle-income countries," as China, India, Brazil, and Indonesia strengthen their health systems and expand insurance coverage, said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics and one of the report authors.

Those four countries have more than three billion residents combined and will account for nearly half of the higher volume use - but not spending growth - of medicines around the world. That's because even with rising incomes and much lower prices in those and other developing countries, most residents can afford only generic pills.

"In developed countries, it's all about the innovation coming out of the R&D pipelines. We've got this surge of innovation, particularly in oncology and rare diseases and hepatitis C," Aitken said.

Those new drugs sometimes carry major improvements in patient care and survival, but even drugs bringing moderate advances are hitting the U.S. market with annual price tags topping $100,000. That's compounded by price increases as high as 5,000 percent imposed by several drugmakers who snap up older drugs with limited competition and then jack up prices.

Medicine use is much higher in wealthy countries, but the gap will narrow as people increase use of generic drugs in developing countries.

By 2020, IMS projects, annual use of medicine will hit 4.5 trillion doses, up 24 percent from this year. More than half the world's population, which is expected to exceed 7.6 billion in 2020, will be taking more than one medicine dose a day then, up from 31 percent in 2005.

In the U.S., about 90 percent of prescriptions dispensed in 2020 will be for generic medicines, up from 88 percent now.

Over the next five years, IMS projects, 225 new medicines will be approved and go on sale, though mainly in developed countries.