More medicine, more problems
Perennial readers of the healthcare industry’s tea leaves, IQVIA — née QuintilesIMS — is once again looking into what the future holds for the healthcare market. The IQVIA Institute for Human Data and Science recently released its report on where the global health market is headed in the next five years.
“Global health is poised to meet a series of key turning points, and changes seen in 2018 will mark the key in directions that drive the outlook for the next five years and beyond,” the report said. “The types of medicines being developed, the way technology contributes to health and how the value of health care is calculated are all changing, markedly.”
Most of the projected trends have to do with two factors that increasingly are in focus — and that the report suggested will continue to be the object of scrutiny in the coming years — namely, cost and value. The report noted that with regard to innovation, the Food and Drug Administration’s access to robust, real-world data on treatments will continue to improve, health apps will make their way into treatment guidelines as an increasing number of studies validate their impact on outcomes, and telehealth use will expand, taking in some of the roughly 400 million visits to the emergency room, urgent care facilities and primary care doctors that can be shifted to lower cost sites of care.
Also among the innovative changes IQVIA projects in the next five years is the increased adoption of biotherapeutic drugs that have heretofore been niche products. These treatments, which include cell-based therapies, gene therapies and regenerative medicine, are expected to see between five and eight drugs join their ranks every year. And while this is promising for patients, gene therapies are something of a harbinger of the ways that reimbursement will need to change to match innovation.
The report also noted that curative treatments offer the ability to be billed at time of treatment, creating a possibly prohibitive cost density, which, coupled with small patient populations, could cause difficulty for payers. “While the flow of Next Generation Biotherapeutics is increasing, payment models have been slow to adapt. In the future, governments, insurers and patients will not be able to afford Next Generation Biotherapeutics without some mechanism to adjudicate which patients are eligible for treatments, negotiate payment based on outcomes or to amortize costs over time.”
An uptick in costly next-generation medication will come as IQVIA projects that, while branded medication spending will fall in developed markets, specialty medication will be the principal driver of spending growth. Branded medication prices are set to drop due to a confluence of factors, not the least of which is a patent expiry impact projected to be 37% larger from 2018 to 2022 than the previous five years. Additionally, new drug launches are expected to slow as most developed markets — save the United States — are expected to see branded drug price levels drop in the next five years.
“The steady level of spending will provide opportunities for payers to focus on addressing outstanding healthcare disparities, to increase access or to invest in approaches to address system inefficiencies,” the report stated.
Among the aspects that will need to be addressed will be the fact that, by 2022, specialty medications’ share of spending will surpass 50%. In 2018, IQVIA said that it will make up 41% of developed market spending — compared with $172 billion in 2013.
A focus on value will increase alongside this growth, and IQVIA highlighted outcomes-based contracts as playing a role in containing costs, though it noted that “the administrative burden on all parties will escalate and become prohibitive unless the outcomes are designed in measurable ways.” And biosimilar drugs also will see new potential in the coming years, with the report noting that by 2022, 77% of current biotech spending will be subject to some form of competition in the developed market. The only hurdle will be biosimilars makers pursuing the products that are difficult to manufacture.
“Clearly the greater the number of competitors, the greater the competition-indued savings for payers, but only time will tell how much savings biosimilars will generate,” the report said.
“Global health is poised to meet a series of key turning points, and changes seen in 2018 will mark the key in directions that drive the outlook for the next five years and beyond,” the report said. “The types of medicines being developed, the way technology contributes to health and how the value of health care is calculated are all changing, markedly.”
Most of the projected trends have to do with two factors that increasingly are in focus — and that the report suggested will continue to be the object of scrutiny in the coming years — namely, cost and value. The report noted that with regard to innovation, the Food and Drug Administration’s access to robust, real-world data on treatments will continue to improve, health apps will make their way into treatment guidelines as an increasing number of studies validate their impact on outcomes, and telehealth use will expand, taking in some of the roughly 400 million visits to the emergency room, urgent care facilities and primary care doctors that can be shifted to lower cost sites of care.
Also among the innovative changes IQVIA projects in the next five years is the increased adoption of biotherapeutic drugs that have heretofore been niche products. These treatments, which include cell-based therapies, gene therapies and regenerative medicine, are expected to see between five and eight drugs join their ranks every year. And while this is promising for patients, gene therapies are something of a harbinger of the ways that reimbursement will need to change to match innovation.
The report also noted that curative treatments offer the ability to be billed at time of treatment, creating a possibly prohibitive cost density, which, coupled with small patient populations, could cause difficulty for payers. “While the flow of Next Generation Biotherapeutics is increasing, payment models have been slow to adapt. In the future, governments, insurers and patients will not be able to afford Next Generation Biotherapeutics without some mechanism to adjudicate which patients are eligible for treatments, negotiate payment based on outcomes or to amortize costs over time.”
An uptick in costly next-generation medication will come as IQVIA projects that, while branded medication spending will fall in developed markets, specialty medication will be the principal driver of spending growth. Branded medication prices are set to drop due to a confluence of factors, not the least of which is a patent expiry impact projected to be 37% larger from 2018 to 2022 than the previous five years. Additionally, new drug launches are expected to slow as most developed markets — save the United States — are expected to see branded drug price levels drop in the next five years.
“The steady level of spending will provide opportunities for payers to focus on addressing outstanding healthcare disparities, to increase access or to invest in approaches to address system inefficiencies,” the report stated.
Among the aspects that will need to be addressed will be the fact that, by 2022, specialty medications’ share of spending will surpass 50%. In 2018, IQVIA said that it will make up 41% of developed market spending — compared with $172 billion in 2013.
A focus on value will increase alongside this growth, and IQVIA highlighted outcomes-based contracts as playing a role in containing costs, though it noted that “the administrative burden on all parties will escalate and become prohibitive unless the outcomes are designed in measurable ways.” And biosimilar drugs also will see new potential in the coming years, with the report noting that by 2022, 77% of current biotech spending will be subject to some form of competition in the developed market. The only hurdle will be biosimilars makers pursuing the products that are difficult to manufacture.
“Clearly the greater the number of competitors, the greater the competition-indued savings for payers, but only time will tell how much savings biosimilars will generate,” the report said.