Specialty drives double-digit growth
For the second year in a row, spending on medicines in 2015 grew by double-digits, increasing 12.2% on an invoice basis to $424.8 billion, according to the IMS Institute for Healthcare Informatics’ medicine report on spending for 2015.
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The report noted that spending increases stemmed from new brand introductions — with more than half of growth attributable to medicines on the market for less than two years — and was offset slightly by expiring patents. In 2015, though new brands, generics and protected brand spending and volume reached $60.4 billion, patent expiries brought about a $14.2 billion drop, bringing total spending growth to $46.2 billion on an invoice price basis.
The largest share of growth is attributable to protected brands, which saw a spending increase of $25.6 billion. This reflects an increase of 12.4% over 2014 on an invoice price basis, but net price growth is estimated to be only 2.8% on average. The IMS Institute attributed the difference between invoice and net price growth to an increase in off-invoice discounts by manufacturers, as well as price protection, rebates and price concessions that, in 2015, offset protected brands prices by about 77% to 81%. Such manufacturer concessions have been rising steadily in the last five years, coinciding with a rise in patient exposure to costs.
The introduction of new brands hit historically high levels in 2015, with spending reaching a total of $42.3 billion, an increase of $24.2 billion. This new level of spending came during a year when there were 73 branded drug introductions, with 43 of them being new active substances. One-third of those received orphan drug designation from the Food and Drug Administration. About 75% of the $24.2 billion in spending growth was attributable to specialty medicines in 2015.
Specialty drugs saw a 21.5% invoice price increase, reaching a market size of $150.8 billion. Oncology treatments contributed the largest share of spending at $391 billion, followed by autoimmune disorder treatments ($30.2 billion), other specialty medications ($28.9 billion), hepatitis treatments ($18.8 billion), multiple sclerosis medications ($17.7 billion) and HIV antivirals ($16.2 billion). In the last five years, spending on specialty medication has doubled, becoming responsible for about 70% of overall medicine spending growth between 2010 and 2015.
On the other end of the price continuum, spending on generics increased $7.9 billion in 2015, a 7.4% increase that brought total spending to $114.1 billion. About 40% of generics spending and 45% of generic spending growth came from branded generics. The biggest drivers of generics growth were the introductions of generics of Nexium, Abilify and Celebrex. Last year also saw the launch of the first biosimilar, Zarxio (filgrastim-sndz), which contributed $72 million in savings in its first five months on the market.
Looking forward, the IMS Institute projected that by 2020, spending on medicines will reach between $610 billion and $640 billion on an invoice price basis, with growth being fueled by innovation and offset in part as brands lose their patent exclusivity. About $91 billion of the $282 billion by which IMS projects spending to grow will come from new medicines launched in the coming years, with an average of 43 to 49 new active substance launches expected every year, as well as approvals of 2,320 novel products.