A new white paper from life sciences advisory firm VOI Consulting shows that while a confluence of technical, medical and social factors led to dramatic growth in per capita prescription drug consumption in the U.S. over the past 20 years, long-range forecast suggests consumption levels have reached a saturation point. This means the U.S. pharmaceutical market will not experience a similar wave of sustained, industry-wide growth in the foreseeable future.
These findings support other recent research indicating U.S. health spending will be less burdensome than previously expected, but they are troubling for the pharmaceutical industry. Although the impact of declining utilization growth already is being felt, the slowdown generally has been attributed to generic competition, cost containment or a stricter regulatory environment. VOI’s analysis shows declining utilization growth is, in fact, the most important structural challenge facing the industry.
The report finds average consumption of prescription drugs among Americans over age 65 went from 2.3 per month in 1990 to 4.1 per month in 2010, an increase of nearly 80% on a per-person basis. By comparison, VOI’s projections show through 2030, the average monthly consumption in this population will increase by less than 2% over current levels. Expressed differently, growth in average consumption among elderly Americans was more than 40 times higher during the 1990 to 2010 period than will be the case over the 2011 to 2030 timeframe. Patients will continue to switch between different therapies, but the average number of prescription drugs consumed per person has essentially stabilized.
This phenomenon, which VOI has dubbed “the utilization plateau,” means changes in consumption will contribute very little to industry growth over the next two decades. Rising per capita utilization was responsible for a 39% increase in prescription drug volume in the 1990s and 16% more during the first decade of the 2000s. Due to the utilization plateau, however, per capita consumption will add only 3.1% to industry volume in the current decade and a meager 1.8% in the 2021 to 2030 period.
The other major contributors to prescription volume growth are a larger population and demographic changes, of which the most notable is the aging baby boomer generation. There is a widespread belief that will provide a substantial boost to the pharmaceutical industry over the next 20 years but, according to VOI’s analysis, the aging population will lead to a 7% increase in volume during the current decade and 5% thereafter, far too low to offset the slowdown in utilization growth.
Todd Clark, VOI Consulting’s president and author of the report, said, “In contrast to the environment most industry managers are accustomed to, there will be no rising tide to lift all boats. To survive and prosper, companies will need to maximize and maintain their share of a relatively stable market via smarter strategic decisions and more effective execution.”
Aggressive pipeline management with an emphasis on speed-to-market and better adherence programs are seen as the most promising avenues to maintain vigorous sales growth.