Drug Spending Growth Drops as Brands Are Replaced by Generics

Pat Wechsler and Alex Nussbaum
Bloomberg
May 18, 2011

The annual growth rate in spending on drugs may be cut in half over the next five years as people opt for less expensive generic medicines over brand-name treatments, a health-care research group said today.

While global expenditures for medicines will still reach almost $1.1 trillion by 2015, the annual compounded growth rate may be reduced to 3 to 6 percent through 2015, compared with 6.2 percent over the last five years, according to the IMS Institute for Healthcare Informatics in Parsippany, New Jersey. Still, emerging markets will double their purchases to as much as $315 billion, the institute said in a report.

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Expiring patents on branded medicines will yield $98 billion in net savings to government health plans and commercial insurers during the next five years, with the U.S. providing the biggest increase in spending for generic alternatives, the institute said. Market share for branded drugs will drop to 53 percent from 64 percent last year, according to the report.

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This article was posted: Wednesday, May 18, 2011 at 8:43 am

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