IQVIA’s annual Use of Medicines report, which details spending and prescribing trends for the US, says that the nominal $452.6 billion in revenue actually worked out to $324.4 billion in net revenue in 2017, after factoring discounts and rebates to payers. Real net spending on a per-person basis actually declined by 2.2%, to $876 per person. The 0.6% net spending increase is the lowest since 2012, by IQVIA’s methodology; those years were characterized by increasing patent expiries. And on that note, IQVIA also predicts that loss of exclusivity will be increasing for the next several years, reaching a cumulative $105 billion during 2018-22.
Overall, IQVIA predicts 4-7% annual growth through 2022, on an invoice basis, and 2-5% annually on a net-revenue basis. Invoice spending could reach around $600 billion by 2022, but net spending will be around $200 billion less. “There remain significant uncertainties in the outlook, including the revenue that will be achieved by new products, the extent of biosimilar penetration and systemic cost savings from them,” states the report. “Manufacturer off-invoice discounts and rebates will continue to increase, and the gap between invoice and net revenues will widen.”
The $128 billion, or 28%, difference between invoice pricing and net revenue to manufacturers is going to be a well-chewed-over bone in coming months, as manufacturers, payers and providers haggle over who is extracting undue value from the current, overly complicated pricing and reimbursement machinery. The Pharmaceutical Care Management Assn., the trade association of leading PBMs, issued its own news release after IQVIA’s, noting that the retail and mail-order channels saw a 2.1% decline in spending in 2017, and took credit for that, stating that “PBM tools [are] working to restrain prescription drug spending.” However, it’s never been clear how much of the rebates PBMs extract from pharma companies is conveyed over to payers. In hospital settings (not generally operated by PBMs), spending increased by 5.9%, but here, too, there’s an alternative view that healthcare systems tend to drive up drug costs for higher revenues for themselves, especially through the 340B program.
Other trends worth noting:
- Specialty drug spending now represents 46.5% of the net per-capital spend in the US. Of the $12 billion in net spending on new drugs, 75% was for specialty products exclusively.
- Biosimilars reached around $900 million in sales in the US in 2017. Filgrastim biosimilars now own 49% of the market, cutting the share of the originator versions (Amgen’s Neulasta and J&J’s Neuprogen).
- Opioid prescribing and spending are down substantially, with a 12% decline in “morphine milligram equivalents” across the various types. Opioid-abuse treatments are on the rise at the same time. (Opioid prescribing peaked in 2011, and has been declining ever since.)
- Generic prescribing has now hit an even 90%, and that figure represents 97% of what IQVIA calculates as the “accessible” market for generics.
The Use of Medicines is published independently by the IQVIA Institute for Human Data Science; it can be accessed here.