U.K. drug spending down, scripts up on 'patent dividend'

Want a statistical representation of the patent cliff's decidedly mixed blessings? The U.K. just released its latest report on drug spending. The gist is, costs are down but prescription numbers are up. And that's because more patients are using cheap generics as branded drugs go off patent.

The number of dispensed prescriptions grew to 961.5 million last year in the U.K., an increase of 3.8%. Their costs dropped by 0.3%, however, to £8.8 billion, or $13.8 billion.

So, clearly the patent cliff is helping the National Health Service's budget, and, as Reuters points out, British taxpayers. It's also pumping up sales for generics makers. But as pharma earnings this quarter have so dramatically spelled out, it's murder on branded sales.

But let's focus on the positive for a moment. As Reuters reports, payers see patent expirations as a boon--a big-time, multibillion-dollar boon. IMS Health figures that expiring patents in developed countries will save governments and other payers some $106 billion over the five years ended 2016, Reuters points out. Branded spending over that timeframe will plummet by $127 billion, while generics spending will increase by $21 billion.

The good news for branded pharma? The shrinking share of branded drugs in the U.K. could actually aid adoption of new drugs as value-based pricing nears, Reuters notes. If branded meds aren't racking up big growth, then the government might be more reasonable about setting prices and introducing newly minted products.

- read the Reuters article

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