A new method of projecting drug spending in the UK forecasts that the total market will show annual growth rates of 3.1%-4.1% to 2015, while sales in the branded segment will increase 0.5%-1.8% a year and total generics sales will grow 10%-11% yearly over the period.These estimates are derived from a new method of projecting drug expenditures in the UK which has been developed by the industry-based Office of Health Economics (OHE). While most projections of medicines spending are "top-down," rooted in the past and simply extrapolate previous trends in spending, the Office says its new method uses a product-level or "bottom-up" approach.
Medicines account for just 10% of total NHS expenditures in the UK, but because drug spending is easy to separate out, the sector continues to come under particular scrutiny in efforts to manage costs, says the OHE. And while forecasting spending on medicines can be useful in planning NHS resource allocation, simple extrapolations of past trends in spending are insufficient because they cannot account for shifts in the mix of medicines available on the market or the appearance of generics.
The majority of drug spending projections are "top-down" macro-based approaches, based on econometric analyses of past spending trends, actuarial estimates of future population changes, assumptions about growth in Gross Domestic Product (GDP), projected changes in prescribing trends and estimates of the impact of any major changes in the legal or regulatory environment that will affect health care services.These models cannot anticipate changes in the mix of medicines available, says OHE.
The Office's new study, on the other hand, projects medicines expenditure in the UK to 2012 using a "product-by-product, pack-by-pack, expert-driven, bottom-up approach." This makes it possible to base forecasts on what is most likely to change in the medicines market, for example the appearance of new products and the debut of new generics and biosimilars, it says.'With that objective in mind, the OHE sought input from a number of experts, primarily from pharmaceutical companies, to better understand trends in the evolution of therapeutic areas that account for about 80% of spending. This also allowed us to understand whether and how well historic trends approximate future trends," says the Office.
The "bottom-up" approach provides richer detail about causes and distribution of costs, such as which therapeutic areas may consumer the greater resources, it notes, and also points out that the calculations in the study differ from other estimates in that they use regression analyses of data drawn directly from experience to date in the UK; for example, in estimating changes caused by the impact of loss of exclusivity and the rate of uptake of newly-launched medicines.