Prescription drug spending in the United States has been tempered in recent years by patent expirations and corresponding patient conversions to generic drugs. Rapid growth in spending on biologics, however, threatens to send pharmacy budgets soaring.
A new report by Evaluate Pharma indicates that by 2018, biologics will account for one quarter of all drug spending worldwide — double the share they commanded less than a decade ago. Moreover, for the world’s top 100 selling drugs, slightly more than half of sales will be for biologic products. Evaluate Pharma does not break out this growth by market, but economic troubles and fiscal austerity in Europe suggest that U.S. spending on biologics may contribute disproportionately to this trend.
Percentage of sales attributable to each
In the United States, spending growth on biologic therapies generally mirrors the trend of increased approvals over the previous decade. In 2004, the Food and Drug Administration approved 7 new biologics; since then, new approvals have reached double digits annually, including 10 last year. With even more biologics in the pipeline, Evaluate Pharma expects them to come to dominate U.S. drug sales. Among the top 25 drugs sold in the United States, the number of biologics is projected to climb from 10 last year to 15 by 2018.
Changing ratio of conventional drugs to biologics
The unknown factor of biologics on pharmacy budgets, of course, is biosimilars. The degree to which biosimilars might mitigate expenditures on biologics is unclear. Evaluate Pharma says the consensus of equity analysts it interviewed suggests that sales erosion resulting from the emergence of biosimilars, possibly late this decade, will be significant.
Source: “Returning to Growth,” Evaluate Pharma, London, June 2013