2028 Global Medicine Spending Is Expected to Reach $2.3 Trillion

Global spending on medications is expected to hit $2.3 trillion by 2028, as not only more therapies become available but also more people have access to them. That’s one of the findings of the IQVIA Institute for Human Data Science’s recent report titled The Global Use of Medicines 2024: Outlook to 2028. Oncology and obesity, among other therapeutic classes, are expected to be among the top areas in global spending over the next five years, estimated researchers.

When comparing the IQVIA Institute’s pre-COVID 19 pandemic outlook with a revised one, “one of the things that we certainly have seen is actually overall higher spending, meaning the dollars spent by payers at list or invoice prices around the world,” explained Michael Kleinrock, lead research director for the IQVIA Institute for Human Data Science and lead researcher of the report, during a recent webinar. Researchers found that global spending, including on vaccines and medications for COVID-19, is estimated to exceed the prepandemic outlook by almost $1.2 trillion through 2028.

That revision is due to higher-than-expected spending in 2022 and 2023, the large amount of innovative drugs in the pipeline and “a widespread shift in the mix of spending to adopt more expensive novel therapies,” according to the report.

“Certainly, payers around the world are going to have to find or have attempted to find that money elsewhere,” said Kleinrock.

Exclusivity losses and generics’ and biosimilars’ lower costs will help offset the growth in spending, noted researchers. Based on invoice price levels, researchers estimated that the global medicine market will expand at a 5% to 8% compound annual growth rate (CAGR) through 2028 to almost $2.3 trillion. That estimate is up from 3% to 6% CAGR in last year’s report, “so it would be 6% to 9% if we didn’t have the downgrading of the COVID dynamics,” Kleinrock stated. In 2021, those drugs and vaccines resulted in 14.2% higher growth than spending would have been without them, but use of the therapeutics and vaccines slowed in 2022 and 2023.

In 2028, oncology is expected to lead in spending at $440 billion, due to “a range of immunotherapies and antibody drug conjugates and bispecifics and cell and gene therapies,” he noted. Chimeric antigen receptor T cells (CAR-Ts) are “contributors in this context, but not just for new medicines,” said Kleinrock. Inline or later-stage medicines “are getting wider access as they reach midlife, where some medicines that launched even 10 years ago are still growing quite substantially, which is frankly unusual as we monitor drug life cycles.”

Continued Growth in Oncology Is Expected

While oncology growth is expected to slow over the next five years, researchers still expect about 100 new drugs to be approved, which is “roughly equivalent” to the past five years. Newer medications, he pointed out, “are often extending life, which also extends the use of other medicines that are given to those patients, adding onto regimens. So it’s not always one medicine being added.…Often it’s regimen-based extension and increased volume and intensity of treatment with much better outcomes.”

Researchers anticipate that the oncology class is expected to grow 14% to 17% CAGR over five years, second only to the obesity class’s 24% to 27% CAGR. Obesity medications are expected to have $74 billion in 2028 spending. However, there is a “big range of uncertainty” within that class because “so far to date, the patients who’ve been getting access to these medicines have been disproportionately and, unusually even for the countries they’re in, self-funding that and paying out of pocket [and so] have not necessarily been receiving the same proportionate degree of insurance coverage or support that they would receive for other reimbursed and covered medicines,” even in Europe’s government-paid markets.

“This is a growth uptick that has captured the public’s imagination and has had patients essentially clamoring for access to these medicines,” stated Kleinrock. “This has also been a period where there have been manufacturing shortages that have been limiting the availability of some of the medicines, and so the upside demand we are uncertain of. Certainly a variety of scenarios could play out, including more patients jumping on the bandwagon. It could also include insurers finding the evidence to date of efficacy and durability of response to be sufficient to begin covering them.”

In 2028, immunology drugs are estimated to be behind oncology with $192 billion in total spending, followed by diabetes therapies, with $184 billion. Diabetes growth is expected to be “relatively slow” at 3% to 6% over the next five years, and the immunology class, faced with the launch of biosimilars, most notably AbbVie Inc.’s Humira (adalimumab) in the U.S., also is expected to grow at a slow pace of 2% to 5%.

The class of central nervous system (CNS) treatments is “an outlier in terms of growth,” observed Kleinrock, and is estimated to be the No. 5 class in terms of 2028 spending. “The potential for Alzheimer’s, for anxiety, for depression, for a variety of the movement disorders to get some significant growth from innovation is really something to watch. It’s really uncertain.”

Next-generation biotherapeutics such as cell and gene therapies, including the new sickle cell treatments and CAR-T therapies, and RNA therapeutics that are “at the cutting edge of science…have a range of mechanisms and disease targets,” he explained. “There are a number of RNA-based therapeutics that are in movement disorders and dystrophies…and developmental disorders that are very valuable there. And when you think about the number of these medicines, we have had close to a hundred of them approved in different places around the world.

“The challenge, in some ways, is not everyone around the world has access to all the medicines,” he continued. “Some of them are only available in a country or two. There are a few that are more widely available, and this is still the very early days of this technology and the broader global health systems’ awareness and ability to adopt them. There are significant logistical and practical hurdles” preventing some people from accessing these treatments, including various infrastructure challenges.

Various Factors Are Impacting U.S. Spending

The U.S. market specifically is expected to grow 2% to 5% CAGR on a net basis over the next five years, down from 5.3% CAGR for the previous five years, said Elyse Munoz, director of the U.S. Thought Leadership Group, during the webinar. “This growth is really exciting because…it’s an upgrade from where we were last year, but it also indicates that there are significant innovative medicines coming, and that we are extending the life of medications that are effective.”

The past five years have seen a doubling in spending for existing brands of about $172 billion, but over the next five years, researchers estimate that “existing brands [will] really hunker down and contribute a significant amount of spend,” to the tune of approximately $322 billion. Because “some really phenomenal” products have become available in the U.S. recently, higher spending on existing brand agents is to be somewhat expected. “But it also indicates a level of comfort, a level of physician confidence in the medications that are coming to market and have been on the market for at least two years,” she maintained.

Brand drugs’ losses of exclusivity due to biosimilar competition are anticipated to have a larger impact over the next five years: $145 billion, up from $59 billion from 2018 to 2023. Biosimilars of the Janssen Pharmaceutical Companies of Johnson & Johnson’s Stelara (ustekinumab) are expected to add to the agents distributed via the specialty pharmacy distribution channel, “and so understanding the effects that those are going to have over the next five years really are leading indicators for the biosimilar market as a whole in the United States.”

New brand spending over the next five years in the U.S. is expected to be “slightly down…but well within the normal range,” said Munoz. “We’re still looking at a good number of launches coming in year over year.”

The United States, she said, is “under significant pricing pressures, especially when we look at the harrowing launch environment that currently exists. There are a lot of different market forces that are driving this, but nonetheless we are seeing above pandemic-era number of launches, as well as percent of brand spend.”

Among those pressures are “depressed first-year sales,” Munoz stated. So regardless of whether a drug is on formulary or covered by government insurers, “we are seeing that [during] the first year on the market for these products, it’s very difficult to get coverage.” This has led to “some innovative choices made by manufacturers in order to balance getting innovative medicines to patients as well as coverage. And that has taken the form in transitional assistance programs in the U.S., where a manufacturer will essentially pay for the medication up to a certain point in time for the patient” in order to balance out patient access and costs to the health care system. This, in turn, results in policy changes impacting the launch environment and the spending environment.

Also influential are the drug negotiating provisions of the Inflation Reduction Act (IRA), as will the redesign of Medicare Part D.

“Who is liable for the medication, for the cost, to the entire system when it comes to Medicare?” she asked. “And so this potential shift to the manufacturers is something that we must carefully balance when we think through the portfolio, the design, the innovation and balancing getting that to patients while preserving the funds for innovation and R&D. And we’ve seen companies pivot and really make an effort to ensure that this wave of medicines that’s important for patients continues.”

The Part D redesign, said Munoz, “has significant implications in oncology.” And while the class is expected to undergo tremendous growth, “there are definitely trajectories, paths, forward in order to ensure that these medications reach patients.”

“But what we’re seeing in the United States, and this is largely driven by the obesity market, is this shift in how, when and where patients are seeking medical care,” which she described as a “flurry of subscription models or telehealth platforms that are being offered outside of insurance coverage” seen before only in areas such as contraception access for women and generics for mental health.

“But now we’re beginning to see it happen for the GLP-1s, the diabetes and obesity products that we’re talking a lot about. Not only that, but we’re seeing individuals go not just to their doctor’s office or a telehealth platform; we’re actually seeing fitness and wellness centers and other weight-loss program clinics arising across the United States, and they’re offering prescription products in a way that they have not done in the past. So this is really a moment where we have patients not just advocating for themselves but really making sure to fund this medication so that they can receive it. We haven’t seen anything quite this big happen in the last couple of decades from this perspective.”

“This is a very exciting time, and the opportunity to improve health is very much at the forefront for individuals in the United States,” she asserted.