Summary
While the level of drug expenditure is closely watched and often commented upon, the composition of that expenditure and its dynamics are not as well understood. Typically, official statistics of drug spending only include drugs dispensed in pharmacies and do not include drugs used in hospitals, an issue which raises questions about their representativeness of total drug spending.
In this report, for the first time, we have included estimates of total drug spending, including hospitals and net of discounts and rebates. These estimates have been based on official statistics from government agencies in the countries where available, in some cases not previously published internationally.
Key messages in the report:
- While the level of drug expenditure is closely watched and often commented upon, the composition of that expenditure and its dynamics are not as well understood.
- The changes in drug spending over the past quarter century have been dramatic in terms of the types of medicine and the diseases they are used to treat.
- But drug spending as a share of healthcare spending has changed to a lesser degree and has represented greater stability than one might have expected.
- In every country studied, drug spending is a small proportion of healthcare spending, averaging 15% (and ranging from 9–20%) and has remained relatively flat over the last 20 years, even though the reliance on pharmaceuticals has increased.
- The cycle of genericization has continued across therapeutic classes, including cancer; and the impact of biosimilars is now also seen.
- The result of these long-term trends is that medicine utilization has grown over time, driven primarily by increased use of generics.
- While new medicines are often seen as large drivers of growth, in context each era has different leading classes, and the recent waves of innovation in oncology, diabetes, and immunology mirror the impact of anti-bacterials, cardiovascular and gastrointestinal treatments which drove spending a quarter century ago.
- As an example, the significant bolus of spending for Hepatitis C from 2013 has largely come and gone, and further illustrates relatively stable long-term trends.