NORWALK, Conn. – A new study published in the journal Health Affairs this month shows a major slowdown in real prescription drug spending growth, a “turning point” in health care with several policy implications, according to the authors.
The report, “Prescription Drug Spending Trends in the United States: Looking Beyond the Turning Point,” uses IMS Health (NYSE: RX) information adjusted for inflation to show that U.S. prescription drug spending in 2007 fell to its lowest growth rate in more than 30 years.
While annual growth has averaged 9.9 percent from 1997 to 2007, it has been declining since 2003, to only 1.6 percent in 2007. The study credits patent expirations, increased generic penetration and fewer new drugs, along with a decline in the role of “blockbuster” drugs.
The growth, size and composition of prescription drug spending is also likely to change dramatically in future years, wrote the authors, Murray Aitken, senior vice president for health care insight at IMS; Ernst Berndt, a professor of applied economics at Massachusetts Institute of Technology; and David Cutler, a professor of economics at Harvard University.
For example, biologics and vaccines are growing in importance relative to traditional pharmaceuticals, and more and more drugs are being prescribed by specialists rather than primary care physicians.
Among the policy implications of these findings, the authors note that a decline in drug sales could stifle or limit investment in research and development, and that balancing regulatory stringency and the need for medical innovation should be a priority. The study also notes that used judiciously, cost-sharing initiatives between payers and patients are an effective approach to limit future drug spending growth.
“As future health care policy is formulated, new market realities that have emerged over the past five years must be fully acknowledged and recognized,” said IMS’s Aitken. “What is increasingly clear is that government policymakers and industry stakeholders must work together more effectively to ensure that a robust pipeline of safe, innovative medicines is being researched, developed and made available to patients – all while achieving an optimal balance between health care costs and societal benefits.”
IMS Health provides “market intelligence” to the pharmaceutical and health care industries, working around the world. For more information, go to www.imshealth.com.
