Big new launches rocket cancer drug spending to $100B: IMS report

Cancer drug pricing is turning more and more heads, especially as critical payers threaten a crackdown in the oncology field. And there's a reason for all the hullabaloo: Spending on oncology meds is increasing rapidly, new IMS numbers show.

According to the institute's 2015 oncology trend report, global spending on cancer therapies shot up 10.3% in 2014 to reach $100 billion--up from $75 billion just 5 years earlier. In the U.S., per capita spending checked in at $99 last year, a big increase over the $71 it hit in 2010.

The reasons? In major developed markets, protected brands and big new launches have primarily driven the growth, the report says. Targeted therapies are doing their fair share to keep spending up, too, rising at a compound average growth rate of 14.6% over the past 5 years and now accounting for almost half the total worldwide tally.

And it doesn't look like those spending numbers will be heading south anytime soon, either. IMS forecasts increased spending levels through 2018 that'll expand at a compound average growth rate of 6% to 8%, bringing oncology spending to between $117 billion and $147 billion by that year. That's even taking into account some market-share grab from cheaper biosimilars, IMS says, whose effects will be offset by climbing cancer diagnoses and treatment rates.

But payers, who have been making noise since pricey, next-gen Sovaldi from Gilead ($GILD) arrived to shake up the hep C scene, aren't going to take the spending hikes lying down. Vocal critic and Express Scripts ($ESRX) CMO Steve Miller has said he's prepping an attack on cancer drug prices that'll be a "much bigger effort" than the quick-hit tactics he used to ignite a price war and drive down hep C costs.

What does that mean for pharma? The changes won't all come at once, and it'll be a series of smaller moves instead of one leveling blow. They could include switching up the order in which costly drugs are used, or relying on a single expensive drug instead of a combo that offers marginal benefits.

Exactly what's to come remains to be seen. But one thing's for sure: It's coming soon. "We want to be able to start influencing the market by 2016," Miller told investors last week. "We are accumulating all the keys to the puzzle to be able to do this."

- see the report

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