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The IMS Institute for Healthcare Informatics report examines spending on medicine in the US, drivers of growth, major market segments, prescription volume, patient costs, and healthcare delivery changes.
The IMS Institute for Healthcare Informatics released its annual Medicines Use and Spending in the U.S. report, a review of 2015 and outlook to 2020 of the medicines market. The report, officially released on April 14, 2016, analyzed medicine use in the United States, focusing specifically on spending, drivers of growth, major market segments, prescription volume, patient costs, and healthcare delivery changes.
Overview of spending in 2015
According to IMS Institute, spending on pharmaceuticals reached $424.8 billion, based on invoice prices, in 2015, up 12.2% from 2014. After adjusting for price concessions and rebates, net spending on medicines increased 8.5% from 2014, topping off at $309.5 billion. IMS Institute says this is the second year spending on medicines has increased by double digits.
IMS Institute attributes the increase in spending growth on an invoice and net basis to five major areas including generics, new brands, protected brands prices, protected brands volume, and patent expirations. According to the report, a large contributor to spending in 2015 was protected brands. Spending on these drugs increased to $28.3 billion in 2015, including volume growth and price increases. This is up from the IMS Institute reported spending growth of $26 billion on protected brands in 2014. Although protected brands played a large role in spending growth, IMS Institute estimates invoice based price growth slowed for protected brands, declining to 12.4% from 14.3% in 2014. Net price growth declined from 5.1% in 2014 to 2.8% in 2015. This is mainly due to rebates and other price concessions that may have offset price growth calculations in previous years.
Loss of patent exclusivity
IMS Institute notes that patent expirations impacted branded drug spending in 2015. Branded drug spending decreased more in 2015 than in 2014. Due to patent expirations in 2015, brand spending decreased $14.2 billion, whereas in 2014, spending decreased only $12.1 billion. While the 2015 figure may reflect an increased reduction of spending due to the loss of patent exclusivity, it is nowhere near the record high brand spending decrease of $32.6 billion in 2012. IMS Institute notes the biggest patent expirations in 2015 included Abilify (aripiprazole), Nexium (esomeprazole), and Namenda (memantine).
IMS Institute says the loss of exclusivity for Suboxone (buprenorphine), Neupogen (filgrastim), and Copaxone (glatiramer acetate injection) did not result in a decline in brand spending. Sandoz’s Zarxio, a biosimilar to filgrastim, was approved in 2015, and subsequently the first biosimilar approved by FDA. The minor effect Neupogen’s patent loss had on brand spending in 2015 may reflect early uncertainty surrounding the interchangeability of biosimilars.
IMS Institute calls specialty drugs one of the “most dynamic market segments of the total market.” In total, spending on specialty drugs reached $121 on a net price basis in 2015, up more than 15% from 2014. Cancer drugs saw an 18% increase in spending during 2015, with a $6.0 billion jump from 2014, to $39.1 billion. The institute says the fastest growing segments of oncology drugs include monoclonal antibodies and protein kinase inhibitors. Diabetes drugs also saw spending increase, increasing by $1.6 billion, estimated 8.2% on a net basis, in 2015. The report notes, “invoice spending on DPP-IV inhibitors increased $1.4 billion, or 21.6%, to $8.1 billion.”
According to IMS Institute, a total of 73 new active substances (NASs) were launched in 2015, a third of which received orphan drug designation from FDA. Oncology drugs accounted for 35% of the new medicines in 2015 and represent the “greatest share of launches by therapeutic area over the past 10 years.” IMS says some notable advances in 2015 were in the areas of precision medicines, rare disease treatments, and chronic disease medicines.
IMS Institute also notes that 2015 was an important year for biosimilars. The US market saw the first biosimilar approval in March 2015 with Sandoz’s Zarxio (filgrastim-sndz). The price difference between biosimilar and reference product was 16% on an invoice price basis, according to the report. By the end of 2015, there were seven applications pending via FDA’s biosimilar pathway. IMS Institute says the biologics with the greatest number of biosimilar candidates include filgrastim, adalimumab, rituximab, etanercept, bevacizumab, trastuzumab, pegfilgrastim, and infliximab. FDA approved Inflectra, a biosimilar to infliximab, in early April 2016. J&J subsidiary, Janssen Biotech said it plans to defend its patents for Remicade (infliximab). It is still uncertain how the approval of a Remicade biosimilar will affect the biologics market in upcoming years.
Looking Forward to 2020
IMS Institute predicts that US spending on medicines will reach $610-640 billion by 2020 on an invoice price basis. The institute predicts that $282 billion of the growth in the next five years will come from branded medicines and $91 billion will result from new medicines, the majority of which will be for oncology. In total, IMS Institute predicts 2320 novel products and 43-49 NASs currently in the pipeline will launch over the next five years.