OECD report warns of high spend and slow growth for pharma industry
pharmafile | November 5, 2015 | News story | Manufacturing and Production, Sales and Marketing | OECD, pharmaceutical spending
The high prices that pharma companies charge for specialty medicines are straining the health budgets of wealthy nations, according to an international report.
The report, Health at a Glance 2015, shows that over the 33 countries in the Organisation for Economic Co-operation and Development (OECD), pharmaceutical spending reached $800 billion in 2013 – and the demand for new drugs is likely to continue.
On average, the use of drugs in hospitals and other health care facilities raises the pharmaceutical bill by around 20%, meaning that on average, one in every five health dollars is spent on pharma products in OECD countries. This raises concerns about how long patients and governments can afford such expensive drugs, the OECD says.
Many countries have implemented policies to boost the pharma market, which has contributed to the slowdown or reduction in pharmaceutical spending. But the share of the generic market is still relatively low in countries such as Switzerland, Italy, Greece and Japan.
Despite the recent slowdown in spending growth, ageing global populations and the high cost of new specialty drugs for diseases like cancer and hepatitis are thought to cause spending to rise again in the coming years.
In addition, rising rates of cancer, diabetes and mental illness are adding to demand for drugs, and improvements in diagnosis and earlier treatment are also contributing to the strain.
In the United States, 2013 spending per person on medicines was twice the OECD average of $500 per person, and more than 35% higher than in Japan, the next biggest spender. At the other end of the scale, Denmark spent less than half the OECD average on retail pharmaceuticals.
New specialty drugs are expected to account for 50% or more of pharmaceutical spending growth within the next five years. The OECD report found that “while some of these high-price medicines bring great benefits to patients, others provide only marginal improvement in the health of patients and are not cost-effective.”
High prices of drugs “are an important barrier to access” for all countries, the report warns. It identifies specialty drugs as a major contributor to pharmaceutical spending growth. For example, increased spending on these drugs is projected to account for 53% of total growth in North America between 2013 and 2018, while in Europe it is expected to account for 94% of the (much slower) growth over the same period. “The huge contribution of specialty medicines to pharmaceutical spending growth is explained by the fact that there will be more of them, priced at very high levels, with more patients needing them,” it finds.
Yasmita Kumar
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