Global COVID-19 Vaccine Spending Estimated At $157bn Through 2025 By IQVIA
Executive Summary
Vaccine spending projections represent about 2% of total spending on medicines IQVIA said. Increased spending will be partly offset by COIVD-19 disruptions, however.
The worldwide vaccination effort to fight COVID-19 will result in cumulative vaccine costs of around $157bn through 2025, according to a new global medicine spending and usage trends report released by the IQVIA Institute for Human Data Science on 29 April.
The vaccine spending projections represent about 2% of total spending on medicines, IQVIA said. Incremental spending on COVID-19 vaccines will be heavily weighted in 2021 and 2022, adding $54bn and $50bn, respectively. (See chart.)
"While it is a large amount, I think everyone would agree that it is small relative to both the human cost of COVID-19 as well as the economic cost," IQVIA's Murray Aitkin, executive director of the Institute for Human Data Science, said in an interview.
Including vaccines, global medicine spending is poised to exceed the pre-pandemic outlook through 2025. Increased spending projections of $88.3bn through 2025 take into account the $157bn increased spending on vaccines offset by roughly $68.2bn from disruption from the pandemic.
IQVIA's forecast assumes that booster shots will be required on a biennial basis to address variants and the durability of immunity as the SARS-CoV2 virus becomes endemic. IQVIA did not publicly forecast which vaccines will become the biggest commercial winners but highlighted the availability of 11 different vaccines around the world. The ones currently being used in the US and Europe are made by Pfizer Inc./BioNTech SE, Moderna, Inc., Johnson & Johnson and AstraZeneca PLC.
The increased spending related to COVID-19 includes only vaccines, not therapeutics. IQVIA said that was because the increased costs from other treatments were largely offset by other impacts from the pandemic. For example, spending on antibiotics was lower in 2020 because of reduced spread of bacterial infections because of social distancing and other safety precautions. Additionally, new patient starts on medications was lower.
"We concluded that there will be offsetting puts and takes so we are not seeing any overall net increase in medicine spending aside from vaccines as a consequence of treating COVID-19 patients differently," Aitkin said.
A Disruptive Year But A Modest Impact On Spending
While the impact of the pandemic on drug spending was significant in 2020 and will be in 2021 as well, the long-term impact on growth trends will be less so, according to IQVIA. The global five-year compound annual growth rate to 2025 is expected to be 4.6%, compared to 4.5% if the pandemic had not occurred.
"Despite an incredibly disruptive year for everyone in 2020, the drivers of medicine use and spending overall were really only modestly effected by the pandemic," Aitkin said.
"There were some offsetting factors, greater use of some medicines, less use of others, fewer new patient starts," he said. "But most medicines are actually used by people who were on them prior to the pandemic and they largely continued with their therapies, so that the net impact was relatively modest in 2020 overall."
Excluding the impact of COVID-19 vaccines, the global medicines market is expected to grow at a compound annual growth rate of 3%-6% through 2025 to $1.6tn, based on invoice (list) prices, IQVIA predicted.
US Pressures Mounting
The US market remains resilient, IQVIA said, with 2%-5% five-year CAGR anticipated to 2025 on an invoice basis, compared to 4.2% over the last five years. The US is expected to face more pressure on a net price basis, however, with a 0%-3% CAGR expected over the next five years. The growth reflects a decline from 3% CAGR over the past five years on a net price basis.
The US market is expected to grow from $372bn in 2021 to $399bn in 2025 on a net price basis, while on an invoice price basis, growth is expected to increase from $549bn in 2021 to $629bn in 2025, reflecting the widening delta between list price and net price. (See chart.)
Drug manufacturers have become increasingly transparent about the rebates and discounts they pay to secure market access for drugs in the US, which they argue is underappreciated by drug industry critics. Johnson & Johnson and Sanofi both recently released drug pricing transparency reports that say they returned more than 50% of US list prices for drugs in the form of rebates and discounts. (Also see "Janssen US Net Drug Prices Declined 5.7% in 2020; J&J Pushes Rebate Reform" - Scrip, 14 Apr, 2021.) and (Also see "Sanofi Paid $14.6bn In Rebates In 2020; Net Prices Were Down" - Scrip, 3 Mar, 2021.)
US net prices for drugs are expected to be about 36% below invoice level prices compared to 31% below invoice level prices in the prior five-year period.
In addition to discounts and rebates, other competitive dynamics and the impact of patent expiries and new generic or biosimilar competition will all contribute to historically slow market growth in the US for the next five years, IQVIA said.
"There is the potential that this will be disrupted through legislative change or some kind of policy shift," Aitkin said. Some kind of US drug pricing legislation has been anticipated for several years, but is thought to be particularly likely this year under the Democratic-controlled Congress.
IQVIA's forecast does not take drug pricing legislation into account given the uncertainty and the timeline for changes that are made to move into the market.
"The ongoing competitive market dynamics are a more significant factor," Aitkin said. "That includes a relatively consolidated set of purchasers, particularly the [pharmacy benefit managers] negotiating for retail drugs, … [and] increased competition within the pharmaceutical industry against each other."
"Those kind of market dynamics over the next five years are a more important factor than any specific policy change that may or may not occur," Aitkin added.