Drug Sales Up 5.4%...But Growth Rate Slowing

February 24, 2006
Pharmaceutical Technology Editors

ePT--the Electronic Newsletter of Pharmaceutical Technology

Drug Sales Up 5.4%...But Growth Rate Slowing

As IMS Health (Fairfield, CT, www.imshealth.com) is reporting that prescription drug sales grew by 5.4%, a task force of the federal Centers for Medicare and Medicaid Services (CMS)  reports that the spending-growth-rate is falling, thanks to increasing reliance on generics.

IMS reported on Feb. 22 that US prescription drug sales grew 5.4% to $251.8 billion in 2005, up from with $238.9 billion in sales the previous year, while the total number of prescriptions was up significantly by 4.7%. The report called biotechnology products "a major growth engine," with sales up 17.2%, though the sector accounted for just 13% of total drug sales. to $32.8 billion.

IMS found that generic drug sales grew by 20.6%. The rise of generics helped account for the slowing in drug-spending-growth reported by a CMS team in "National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending," (Health Affairs, 25 (1): 1, 186–196, [2006], content.healthaffairs.org/cgi/content/full/25/1/186). "Across all payers," the paper reported, "growth in retail drug sales continued to decelerate in 2004, increasing 8.2 percent. This was the first year of single-digit growth in the retail market in ten years; as a result, drug spending held steady at about 11 percent of aggregate health spending…"

The CMS analysis credits increasing reliance on generic and over-the-counter medicines as alternatives to branded pharmaceuticals, a shift to mail-order distribution, and drops in use of come products because of safety concerns.

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