The IQVIA Institute for Human Data Science just released their latest report, Global Medicine Spending and Usage Trends: Outlook to 2024. Among many of the insights provided include that global medicine spending is projected to increase from 2 to 5% annually through 2024 on a net basis, compared to 4.2% in the past five years. Global medicine spending is expected to exceed $1.1 trillion by 2024.

Murray Aitken, IQVIA senior vice president and executive director of the IQVIA Institute for Human Data Science, took time to speak with BioSpace about the report ahead of publication.

The report draws upon IQVIA proprietary data sets. Those data sets are based on a number of different sources of information, including pharmaceutical wholesalers who handle the physical distribution of medicines," Aitken said. "We work with those wholesalers around the world in over 100 countries to gather information about their shipments of pharmaceuticals to retail pharmacies and hospitals, for example. Thats the foundation for the data we use.

In addition, Aitken emphasized, wanting to make sure readers of the report understand, that they are utilizing slightly different metrics for this report. One, he said, is we have reported the size of the market on a net price basis, which is different than weve done before, where we havent been able to fully estimate the impact of rebates and discounts. In 2019, we estimate those were $255 billion. In 2024 we estimate they are up to $400 billion and we have taken those off the market size to arrive at a net market size.

Another is the use of defined daily dose (DDD), which is a measurement that converts every type of drug and how its delivered, whether thats via pills, vials, patches, creams, etc., into a clearly defined daily dose. This allows readers and various stakeholders to more accurately assess the use and cost comparisons for drugs if dosing lasts various amounts of time, whether a year, a month or an hour.

One important finding from the report is that although spending on medicines continues to rise from its current level of $935 billion in 2019 to $1.1 trillion in 2024 (on a net price basis), thats actually a slower rate of growth than has been seen over the past five years.

Aitken believes there are two main factors for the slowing.

First is that we are seeing payers attempt to constrain growth in their budgets, Aitken said.

As a result, they are decreasing their budgets and doing so with aggressive negotiations with drug manufacturers. They may also restrict access or limit access to certain drugs for only certain patients. This is not a new trend, Aitken noted, but we see it becoming more intense each year.

As such, they expect to see new prices for branded drugs either fall by 1% or increase by 2%, somewhere in that range. Thats down from the levels weve seen historically, Aitken said.

And in other developed countries, the report projects pricing to decline by between 2 and 5%.

The second factor is that many drugs are expected to lose patent protection or some other form of exclusivity over the next five years. Aitken said, The impact there will be to reduce the market for those branded drugs by about $139 billion over the next five years, compared to $107 billion reduction that we saw in the past five years. Weve got more impact bringing down growth from the effects of drugs losing exclusivity and having generics or biosimilars entering the market.

On the other hand, the report notes a very healthy research-and-development pipeline thats producing new drugs. Its not expanding the market faster than the impacts of the price reductions and patent expirations.

Another significant trend is adoption of specialty medicines, which is driving increased spending. Currently specialty medicines make up about 36% of global spending on medicines and are projected to make up 40% by 2024.

The IQVIA report defines specialty medicines as those that treat chronic, complex or rare diseases and have a minimum of four out of seven of the following additional characteristics: cost more than $6,000 annually, are initiated or subscribed by a specialist physician, are not self-administered, require special handling in the supply chain, require patient payment assistance, are distributed through non-traditional channels, such as specialty pharmacies, and the therapies have significant side effects that require additional counseling or monitoring.

Aitken said, Its broader than gene therapies, and includes most biologics, and gene and cell therapies, but also some small molecule drugs, such as targeted therapeutics for cancer.

He added, When we look at the pipeline, we see a growing concentration on specialty drugs, including biologics, including what we call next-generation biotherapeutics, which is where cell and gene therapies fall. We also see a lot more focus for drugs treating rare diseases or drugs for disease areas where there are no effective treatments today.

This is a long-term trend that has been playing out for at least the last decade, reflected both in drugs coming into the market over the past few years as well as the pipeline compounds currently working their way through clinical development that will be launched in the next three to five years.

I think the payers, Aitken said, are under pressure because weve got more therapies becoming available that can help extend life, improve the quality of life, reduce the need for social services or other types of medical care, but they put pressure on the drug budgets.

Patients will often benefit, because globally they will likely have greater access to new medicines, although they may come at a higher cost. For healthcare providers, they will have expanded treatment options and new technologies, but they will have higher price tags that target patients with critical unmet need, which will likely bring additional administrative burdens to handle new innovative payment strategies.

And for drug manufacturers, they can expect to see continuing pricing and market access controls that will affect uptake of novel drugs at launch and require evolving investments and efforts to optimize the medicines adoption.

The future is bright but will come with challenges. Aitken noted, The number of daily doses of drugs that are consumed globally is currently at about 1.8 trillion doses, up from 1.6 trillion five years ago. The volume is rising fastest in those drugs used to treat noncommunicable diseases, which includes cardiovascular disease, diabetes, respiratory disorders, and cancer.

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IQVIA Report: Spending on Drugs Globally to Exceed $1.1 Trillion by 2024 - BioSpace