Report: Rx drug sales to soar in U.S.
By STEPHEN SINGER, AP Business Writer
Published: October 26, 2005
Last Modified: October 26, 2005 at 04:05 AM
HARTFORD, Conn. (AP) - Prescription drug sales are projected to soar in the United States next year, fueled in part by a $400 billion expansion of the nation's Medicare program, a pharmaceutical research company reported Tuesday.
The U.S. drug market, which already accounts for 43 percent of global pharmaceutical sales, is projected to grow between 8 percent and 9 percent in 2006, according to IMS Health, a Fairfield-based pharmaceutical research company.
Worldwide market size is expected to reach $650 billion, with the United States accounting for nearly $280 billion.
Growth in U.S. drug sales is expected to outpace global demand. Global sales are expected to increase 6 percent to 7 percent next year, a slowing of the 7 percent to 8 percent growth the industry is projecting for 2005, IMS said in its report. Drug sales are defined as from manufacturer to wholesaler.
The U.S. growth concerns Jerry Avorn, a Harvard Medical School professor and author of the book "Powerful Medicines".
"Certainly, drugs are one of the most useful and cost-effective things we do, but in the U.S., drug choices are driven by promotion and marketing, which pushes doctors to prescribe and patients to request them," Avorn said. "It's not that we should be using less medication. We need to stop going for the most expensive and most heavily promoted drug."
The Pharmaceutical Research and Manufacturers of America, a drug company association, did not return calls seeking comment.
Tuesday's report said five major European countries - France, Germany, Italy, Spain and the United Kingdom - will see market growth next year between 4 percent and 5 percent, to about $124 billion.
In addition, the pharmaceutical market in Japan is expected to drop by about 1 percent or less, to about $69 billion, IMS Health said.
In the United States, increased access by seniors to lower-cost medications through Medicare Part D and a rebound from the impact of Cox-2 product recalls and safety issues will help support the higher level of growth, IMS Health said.
The prescription drug program, which was signed into law in 2003 and is set to begin in January, is part of the greatest expansion in Medicare's 40-year history, costing nearly $400 billion over 10 years.
An investment firm has said the program could yield $10 billion in revenue and $250 million in earnings next year for nine large insurance companies, but long-term prospects for the pharmaceutical companies are less clear.
"In the immediate future, 2006-07, we see the focus on getting patients enrolled, getting patients comfortable with how the program works so they see a benefit," said Murray Aitken, an IMS Health senior vice president. "In the longer term we see an opportunity for the federal government through the Medicare program to exert pressure on plans administering the program to ensure that government is getting value for its money. The program comes with an enormous price tag."
As a result, drug companies will likely be under pressure to prove their products' medical benefits are superior or that its treatment is cost effective, he said.
Sales growth in the United States also is expected with the introduction of new products, such as a weight loss drug that could come onto the market next year, Aitken said.
In contrast, European markets apply brakes on drug costs through various national health systems that approve drugs and provide reimbursements, he said.
Among the major classes of drug, cancer treatments will grow the fastest worldwide, at a rate of between 17 percent and 18 percent next year, IMS Health said.
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