There seems to be no brakes on the cost of prescription drugs. Even the cost of generics is skyrocketing (see: Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs). It has been estimated that global spending for prescription drugs will reach $1.3 trillion by 2018 (see: Prescription Drug Spending Will Reach $1.3 Trillion – That’s Trillion – By 2018). Here are some details about that number:
It appears that spending on prescription medicines will continue to defy the laws of gravity, according to a new report from IMS Health Institute for Informatics. Global spending is forecast to reach nearly $1.3 trillion by 2018, up nearly 30% from last year and the compounded annual growth rate will range from 4% to 7% during that time, compared with the 5.2% seen over the past five years. The reason for the projected increase is an interesting convergence of familiar developments. The first is the ongoing introduction of expensive specialty medicines that are used to combat cancer and other hard-to-treat maladies....For instance, global spending on cancer medications is expected to reach about $100 billion in 2018, up from $65 billion last year. And while not everyone classifies the newest Hepatitis C treatments—such as the Sovaldi and Harvoni medicines...as specialty drugs, IMS forecasts this category to generate another $100 billion in total spending between now and 2018. At the same time, the celebrated patent cliff has largely come and gone. For the most part, there will be fewer blockbuster medicines that will lose patent protection in developed markets, such as the U.S., than in recent years. This means that there will be fewer opportunities for payers and patients to benefit from a plethora of lower-cost generics....IMS believes that the actual spending in 2014 will amount to $70 billion, up from $40 billion in 2013....Not surprisingly, the U.S. will experience the largest rise in per capita spending between 2013 and 2018, rising to about $1,400 from roughly $1,100 last year. Japan, Canada, Germany and the U.K. are also forecast to see increases, although France and Spain, where cost controls are under way, are forecast to see a drop. Per-capita spending in China should rise to more than $120 from about $70.
Market forces don't seem to have much of an effect on the cost of specialty medicines, primarily those used to treat cancer. Many of these chemotherapeutic agents are somewhat unique so that there may be no competition in the marketplace. Moreover, drug regimens are stipulated for the treatment of most cancers so that there may be no latitude in choosing less expensive substitute drugs (see: CANCER TREATMENT REGIMENS). Health insurance companies are thus usually forced to reimburse for whatever price the drug company asks. One of the most interesting points in this article is about the rise in per-capita drug spending in China. Here are a few numbers about the healthcare delivery system in China (see: China Pharmaceutical Industry):
Medical Resources: China had 961,830 medical institutions (23,005 hospitals) with 5.57 million beds (4.03 million in hospitals) and 6.5 million medical staff (2.52 medical doctors) as of the end of 2012. The vast majority of these medical resources are available in cities. More than 6.27 billion visits were made to medical institutions in China in 2011, of which 153 million inpatients visits.
Healthcare Spending and Funding: China's urban per capita healthcare spending increased 3.1 times to RMB 2,695 in 2011 from RMB 872 in 2000; rural per capita healthcare spending increased 3.8 times to RMB 814 in 2011 from RMB 215 in 2000. The Chinese government's expenditure on healthcare increased 10.4 times to RMB 737.89 billion in 2011 from RMB 70.95 billion in 2000; government healthcare spending as a percentage of total medical bills climbed to 30.4% in 2011 from 15.5% in 2000. (1 Chinese Yuan equals 0.16 US Dollar).