World’s Drug Bill Will Reach $1.3 Trillion in 2018: Study

Worldwide spending on medicines will reach almost $1.3 trillion by 2018, as new treatments for hepatitis C and cancer come to market and as people around the globe use rising incomes to buy pharmaceuticals.

The new drugs, such as Gilead Sciences Inc.’s $1,000-per-pill hepatitis C treatment, will help drive the increase in spending up 30 percent from 2013 levels, according to a report published today by the IMS Institute for Healthcare Informatics, the research arm of IMS Health Holdings Inc., which tracks drug prescriptions and sells the data.

As drug spending rises, health systems and nations will have to make decisions on how they allocate budgets, said Murray Aitken, IMS Institute’s executive director, in a telephone interview. “The focus now is, how do we get value from the trillion dollars we’re spending?”

The U.S. will remain the top spender per capita in 2018, and drug prices there are under increasing scrutiny by health insurers and lawmakers. IMS forecasts Americans will pay an average of $1,409 a person in 2018, up from $1,075 last year, a faster rate of growth than the expansion of the population. China, the world’s second-biggest pharmaceutical market, is forecast to spend $124 per capita in 2018, an increase from $72.

While new, high-price medicines will drive spending in developed countries, population growth and rising incomes -- and more access to health care -- will raise spending in Africa, Asia and elsewhere, IMS found.

Other types of health spending, such as on hospitals and doctor visits, won’t necessarily rise in proportion, said Aitken. In some cases, drugs can lower total spending by keeping patients out of the hospital or doctor’s office, he said.

Hepatitis C

New hepatitis C drugs, including Gilead’s medicines Sovaldi and Harvoni, and Johnson & Johnson’s Olysio, are already pushing up spending this year, Aitken said. From 2014 to 2018, the world will spend $100 billion on the new medicines.

About 3.2 million Americans have the liver infection, and the new drugs do away with side-effect heavy injections while vastly improving chances of a cure.

Cancer drugs will take an even bigger role in driving up spending in the U.S. and worldwide in coming years. There are 120 oncology drugs in the final stage of testing before approval by regulators, and another 374 in the mid-stage trials. Global spend on cancer medicines will grow by 50 percent to more than $100 billion in 2018, according to IMS.

Only France and Spain will see spending on drugs decrease in the next five years, IMS found. This trend is due to strict cost controls implemented by the two countries after the global financial recession, said Aitken.

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