The dynamics of drug expenditures
By: Murray Aitken | September 05, 2017
A new QuintilesIMS Institute report explores the steady growth of drug expenditure in five developed countries, and what is driving these trends.
Drug spending in developed countries has seen remarkable changes in recent years. Shifting regulations, the introduction of innovative drugs, patent expiries, and increases in healthcare spending are just a few of the trends that have effected drug expenditure in the past 20 years.
In our newest QuintilesIMS Institute report, Understanding the Dynamics of Drug Expenditure: Shares, Levels, Compositions and Drivers, we unpack these trends, exploring how they have impacted the healthcare systems in France Germany, Japan, the United Kingdom (UK) and the United States (US) over the past 20 years. The report details which therapy areas are on top, where there have been declines, and where dramatic shifts can help tell a larger story.
While each country has a distinct set of drivers based on underlying clinical and regulatory issues, many patterns did emerge.
In the late 90s, the proliferation of blockbuster drugs altered the composition of drug expenditure, particularly in developed countries. From 1995-2000, most of these countries saw increases in total drug expenditures as blockbuster drugs became widely available. That also increased overall spending. Since the mid-90s, the share of total health expenditure attributed to drugs in these five countries has remained relatively consistent. However, as those blockbuster drugs lost patent protection, the types of drugs driving spending rather than gaining traction has shifted. Therapies that once dominated spending became dramatically less important, while other entirely new therapies take on a growing share of spending.
Over the past five years, sales of existing, protected, branded drugs accounted for 45-65 percent of total drug expenditure in these countries, contributing approximately $10Bn to growth annually. Meanwhile, brands that are no longer protected make-up 7-35 percent of expenditure. This gap reflects different policies affecting usage and reimbursement of no longer protected brands and generics in each country.
If you look at nominal drug expenditure using invoice prices, spending over the past 20 years has risen substantially across all five countries. However this impact becomes less significant when the numbers are normalized for economic and population growth, especially in the most recent decade.
Drug spending also hasn’t risen as rapidly as a percentage of health expenditure overall. Indeed, for some countries it has declined from peaks in the late 1990s. For example, France’s drug spend declined from 13.2% in 2000 to less than 10 percent in 2015l and in the U.K. spending declined from 11.6% to 9.7% in the same time frame.
These are just a few of the insights and data points readers will find in this latest report, which is available at www.quintilesimsinstitute.org. Along with a detailed analysis of drug expenditure trends by drug class and country, it delves into the unique healthcare policies and therapy areas that have the biggest impact, and offers perspective on how these trends will shape drug spending in the years to come.