Potential shortfalls in enrollment for President Barack Obama’s health-care overhaul would put a 30 percent dent in projections for U.S. prescription-drug sales in 2017, a report from IMS Health Inc. shows.
That worst-case scenario would translate to $320 billion in drug spending, according to the report. The best case is supposed to be $460 billion, boosted by demand from the health law’s expansion of insurance coverage and medical screenings, and removal of restrictions on pre-existing conditions.
Expenditures in the $2.7 trillion U.S. health-care system have doubled since 1980, growing to 18 percent of gross domestic product and leading to financial success for drugmakers, hospitals and insurers. The 2010 health law’s promise of making medical coverage an affordable possibility for at least 25 million uninsured people was projected to provide another boost.
“There’s a lot at stake,” Michael Kleinrock, director of research at the IMS Institute for Healthcare Informatics, said in a telephone interview. “This would be a very dramatic decline. We don’t think that that kind of sky-is-falling scenario is most likely, but it is not off the table.”
Last month, 106,185 people enrolled in private health plans through insurance exchanges that debuted Oct. 1 as part of the Patient Protection and Affordable Care Act of 2010. U.S. health officials had a goal of enrolling 800,000 people through November and an estimated 7 million sign-ups were predicted for the first year.
A middle ground that involves a slower coverage expansion would generate as much as $380 billion in U.S. drug spending in 2017, according to the report from Kleinrock’s group, which is the research arm of IMS Health, a drug sales analysis company based in Danbury, Connecticut. Drug spending in 2012 was about $328 billion, the group said.
Still, global spending on drugs is projected to surpass $1 trillion in 2014 for the first time, and reach $1.2 trillion in 2017. The growth of as much as $235 billion from 2012 to 2017 would roughly match the $234 billion increase in the prior five years, according to the report.
Oncology drugs will see the most spending in developed countries, with sales of as much as $84 billion in 2017, followed by $39 billion on diabetes drugs, IMS said. Pain medicines will lead the way in emerging markets, with as much as $25 billion in spending.
Spending on generic drugs may make up 21 percent of sales in developed countries in 2017 from 16 percent in 2012, the report found.
Global pharmaceutical spending may also fluctuate based on the European Union’s economic recovery, according to the report. A middle-ground scenario where access to medicines is sustained would generate as much as $31 billion in spending in 2017 on novel drugs that enter the market in the 2013 to 2017 time period, according to the report.
IMS also found 641 drug candidates are in late-stage research, a third of which are biologics, which are made from living organisms and are more complex than traditional pills. About 35 new drugs are expected to reach the market each year through 2017, and transform treatment in skin and breast cancer, multiple sclerosis and hepatitis C, among others, IMS said.
GlaxoSmithKline Plc won Food and Drug Administration approval in May for two drugs to treat the deadliest form of skin cancer. Gilead Sciences Inc. and Johnson & Johnson and Medivir AB are awaiting FDA clearance for hepatitis C treatments that can lessen side effects.
In the end, structural changes within health-care systems globally will determine spending growth, according to the report. Japan is pushing to control drug costs amid an aging population, China is moving toward a goal of universal coverage by 2020 and the potential for new austerity measures in Europe is leading countries there to look for savings through greater use of generics.
In the U.S., rollout of the Affordable Care Act has been marred by website outages, negative public perceptions and political opposition by Republican state governors.
The latest setback came last week when President Barack Obama responded to public opposition and offered a one-year reprieve for insurance policies that don’t meet the stricter requirements of the health law. The about-face by Obama may undermine enrollment in the new health law exchanges, primarily by young and healthy people who are critical to balancing out the costs of care for those who are older and sicker.
Americans have until Dec. 15 to sign up for coverage that starts Jan. 1. People who don’t obtain health insurance by March 31, risk paying a fine of as much as 1 percent of their income.
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