Drug spending tops $1 trillion on hepatitis C, cancer therapies: study

[November 20, 2014] By Caroline Humer

(Reuters) - Global pharmaceutical spending will break the trillion dollar mark in 2014, driven by high prices in the United States for novel treatments such as Gilead Sciences Inc's Sovaldi for hepatitis C and new cancer drugs, according to a study released on Thursday.

Total spending on drugs will hit $1.06 trillion, an increase of 7 percent over 2013 levels, according to the report from the IMS Institute for Healthcare Informatics. The increase also reflected a slowdown in the introduction of cheaper generic versions of branded medicines.

By 2018, IMS expects spending to rise to $1.3 trillion due to new breakthrough therapies.

Hepatitis C drugs will add about $100 billion in total spending in the next few years, while cancer spending will rise to $100 billion and diabetes care will account for another $78 billion. Cancer drugs contributing to the high cost include Roche Holding AG's Perjeta and Kadcyla, Pharmacyclics Inc's Imbruvica and Amgen's Kyprolis.

Drugmakers have come under pressure over high U.S. prices, particularly Sovaldi's list price of $1,000 per pill. State Medicaid offices and private insurers say the prices are too high to bear, while drugmakers defend them as reflecting the wider cost of developing medicines, many of which they say will never make a profit.

U.S. spending accounts for about one-third of the total drug spend and is due to rise 11.7 percent in 2014 before the growth rate slows to an annual 5 percent increase after 2015.

IMS's spending figures do not take into account manufacturer rebates, coupons and discounts, particularly in the United States, which will lower spending by about one half a percentage point during that time period, or $60 billion to $80 billion. In the 2009 to 2013 period, there was an estimated $63 billion in rebates, IMS said.

"Within the U.S. market, we are seeing in aggregate higher levels of rebate, especially in the diabetes and respiratory therapy areas," said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics.

Rebates typically increase for drugs that are about to go off patent, then disappear once they are off patent, Aitken said.

He declined to discuss specific drugs such as Lantus, which Sanofi said recently was coming under intense price pressure from U.S. insurers, and is due to go off patent in 2015.

(Reporting by Caroline Humer; Editing by Leslie Adler)

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