'Historically Slow' Growth Rate in U.S. Drug Spending Over the Next Five Years, Predicts IQVIA Report

Spending using net prices (prices after discounts and rebates are factored in) will grow between -1% and 2% between 2023 through 2027, say IQVIA analysts in the company's Global Use of Medicines report. Patent expiration and competition from generics and biosimilars and the healthcare-related provisions of the Inflation Reduction Act will push down spending, predict IQ.

Spending on drugs in the U.S. on a net-price basis will grow at a “historically slow” rate over the next five years because of Inflation Reduction Act and competition from generics and biologics according to the IQVIA’s Global Use of Medicines report.

The report, published today, projects that compound annual growth rate (CAGR) of spending at the net level (invoiced prices less rebates and discounts) will be between -1% and 2% from 2023 through 2027, compared to 4% CAGR during the previous five-year period (2018 to 2022) and 5% CAGR during the five-year period before that (2013-2017).

The IQVIA report projects that U.S. spending on drug using invoiced prices will increase by $134 billion, or 21%, from $629 billion in 2022 to $763 billion in 2027. But according to IQVIA’s projections, once discounts and rebates are factored in, the growth will be only $18 billion, or 4%, $402 billion in 2022 to $420 billion in 2027.

By 2027, the report predicts, the total spending after discounts and rebates will be 45% lower than spending at invoiced amount ($420 billion vs. $763 billion).

The provisions of the Inflation Reduction Act that will affect spending on drugs include rebates if prices increase faster than the rate of inflation, the $2,000 cap on Part D out-of-pocket expenses and CMS negotiation of drug prices, starting with 10 drugs in 2026, the report says.

The IQVIA report estimates that “losses of exclusivity” will decrease spending by $141 billion over the next five years. The report says expiration of exclusivity (the end of patent protection) of small-molecule drugs will reduce spending on brand-name drugs by $98 billion and mentions Xarelto (rivaroxaban), a direct oral anticoagulants, in that context. Biologics losing exclusivity will reduced spending on brand-name drugs by $42 billion, the report says, citing Humira (adalimumab), which is expected to experience biosimilar competition this year, and Stelara (ustekinumab).

The 55-page report projects that global spending on drugs, before any discounts or rebates and excluding spending on COVID-19 vaccines and therapeutics, will grow 3% to 6% over the next five years, reaching $1.9 trillion in 2027.

Global spending on COVID-19 vaccines will reach $380 billion total for the seven years from 2020 to 2027. The IQVIA analysts say this is higher than previous IQVIA estimates, partly because the previous estimates assumed booster doses would be half of the regular doses.