The US pharmaceutical market is expected to increase from $354 billion in 2015 to $497 billion by 2020, representing a compound annual growth rate of 4.4%, according to research and consulting firm GlobalData.
The company’s latest report states that the driving factors of this growth include an aging demographic population, high cost of prescription drugs, and long-term increases in mandatory entitlement spending.
In 2016, the elderly accounted for 14.8% of the total US population, and it is estimated that by 2020 this share will have increased to 16.6%, putting demands on the healthcare system and acting as a perpetual growth driver for the healthcare market in years to come.
The market will also benefit from wide insurance coverage in the US. Approximately 91% of the population has health insurance, with most citizens over 65 obtaining coverage either through government programs such as Medicare or Medicaid, through a private individual healthcare package, or a combination of both.
Government policies and structure of the US economy means that, in the absence of a central drug pricing body, drug costs are determined by pharmaceutical companies themselves, which helps them to set prices in such a way as to earn profits, sometimes leading to public outcry. Two high-profile pricing scandals that made headlines last-year include Mylan’s EpiPen, a medicine that has grown in price by more than 400% since 2009, and the price hike on the 62-year-old infectious disease drug Daraprim from $13.50 a tablet to $750, which led to the ouster of Turing Pharmaceuticals then-CEO Martin Shkreli.
However, major policy changes are anticipated following the recent election of Donald Trump, who has promised a complete restructuring of existing Affordable Care Act (ACA) reforms. While the President-elect and Republicans in Congress have promised to “repeal and replace” the ACA with new reforms, what changes will be made to the existing legislation and what impact it will have on policy holders has yet to be made clear, leaving many Americans restless.
Despite this uncertainty, a number of opportunities will remain for drugs manufacturers over the forecast period. In 2015, the federal government spent $934 billion on healthcare, including $529 billion on Medicare, $331 billion on Medicaid and $74 billion on Health and Human Services. The spending on healthcare was more than that on social security ($896 billion) and defense spending ($756 billion), with current forecasts from the US Government stating that spending on Medicare and Medicaid will be about $1.4 trillion by 2024.
– Information based on GlobalData’s report: CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – US