# Presentation: 010665

## The Impact of Pipeline Drugs on Pharmaceutical Spending

**C. Daniel Mullins, Ph.D.**
**Francis Palumbo, Ph.D., J.D.**
**Bruce Stuart, Ph.D.**
**University of Maryland School of Pharmacy**

## Pharmaceutical expenditures have risen significantly in recent years

**Pharmaceutical expenditures have risen significantly in recent years**

- Source:  Levit K et. al. “Health Spending In 1998:  Signals of  Change”
-               Jan/Feb 2000, ***Health Affairs*****:** 19(1)124-132.

## Purpose: project future drug spending
Methods: 
straight line actuarial projections
focus on major drugs/drug classes 
Sources:
Expenditure data (1989-1998): 
top 100 drugs (proxy for existing)
newly marketed drugs (proxy for pipeline) 
Price data:   Average Wholesale Price (AWP)
Utilization data:   number of prescriptions
 (published in American Druggist)

**Methods: **
**straight line actuarial projections**
**focus on major drugs/drug classes **
**Sources:**
**Expenditure data (1989-1998): **
**top 100 drugs (proxy for existing)**
**newly marketed drugs (proxy for pipeline) **
**Price data:   Average Wholesale Price (AWP)**
**Utilization data:   number of prescriptions**
** *****(published in American Druggist)***

**University of Maryland Study**

## Overall, Rx expenditures will increase 15-18% annually from 1999-2004

**Overall, Rx expenditures will increase 15-18% annually from 1999-2004**

## Increased price and use of existing drugs account for 60 percent of future spending increases

**5-6%**

**4-5%**

**4-5%**

**1-2%**

- Pipeline drugs include replacement therapies and new therapies for which no equivalent currently exists.

## Expenditures on pipeline drugs account for 40 percent of future spending increases

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**Expenditures on pipeline drugs account for 40 percent of future spending increases**

**5-6%**

**1-2%**

- Pipeline drugs include replacement therapies and new therapies for which no equivalent currently exists.

## New drugs are most likely to exhibit price increases

**60%**

**3%**

**37%**

**New drugs are most likely to exhibit price increases**

*****_**Top 100 Drugs**_

**2%**

**70%**

**28%**

******_**Recently Marketed Drugs**_

- * *Most frequently prescribed dosages

- * All dosages

## CASE STUDY:While use of pain relievers is fairly constant...

**NSAID Volume**
*** ***

**Source: PCS Health Systems, Data Warehouse; Eligibility File**

## NSAID Costs

**Source: PCS Health Systems, Data Warehouse; Eligibility File**

**. . . per capita spending has increased by 46%**

## The number of prescriptions will continue to rise

**The number of prescriptions will continue to rise**

## CASE STUDY:

**New drugs are adopted rapidly and bring in new patients **

**Source:  IMS America; June 1998, November 1998**

**730,000**

**1,540,000**

**Lipitor**

## What’s in the Pipeline? 

**Blockbuster drugs**
**“****Me too” drugs**
**Lifestyle drugs**
**Top classes of pipeline drugs**
**Biotechnology drugs**
**Cardiovascular drugs**
**Antidepressants**
**Anti-cancer**
**Erectile dysfunction**

## What other factors could influence future spending?

**Aging population**
**DTC advertising**
**Lifestyle drugs**
**New technology**

_**Increase**_

_**Decrease**_

**Generic drugs**
**Pharmacy cost  management**
**Reductions in other spending?**

## Factors with uncertain impact

**Legislative and regulatory issues**
**Other demographic changes**
**Internet**
**Mergers and changes in drug distribution**

## Conclusions

**Expenditures will continue to rise at a double digit rate**
**Pipeline drugs account for 40 percent of projected expenditure increases**
**Existing drugs account for the remaining 60 percent of projected expenditure increases**
**Price continues to be an important factor**