How the Cancer Drug Market Will Rise to $150 Billion by 2020

Print Email

It is almost certain that anyone who reads now knows someone who has been treated for cancer. In many cases it is friends and family, or co-workers or people you run into routinely. Cancer is a killer. It is also a huge business for the biotech and pharmaceutical players who treat cancer.

A new study from IMS Health has projected that the global market for cancer treatments rose to $107 billion in 2015. While the cost of this is said to be driven by a record level of innovation, the projected costs are set to skyrocket. IMS Health is projecting that annual growth in the oncology drug market is expected to be 7.5% to 10.5% through 2020, which puts the drug market’s future value at a whopping $150 billion.

IMS showed that over 20 tumor types are being treated with one or more of the 70 new cancer treatments that have been launched in the past five years. Many of these drugs are not even yet available to patients in most countries.

That figure of $107 billion for 2015 was an increase of 11.5% on a constant-dollar basis versus 2014. This measurement is using ex-manufacturer prices, but it also does not reflect off-invoice discounts or other rebates and patient access programs.

There may be at least more hints of negotiated health care costs here. IMS noted that payers are expected to tighten their negotiation stance with manufacturers, and that they will adopt new payment models to drive greater value.

Additional data points from the study are as follows:

  • The pipeline of oncology drugs in clinical development has expanded by more than 60 percent during the past decade, with almost 90 percent of the focus on targeted agents.
  • The median time from patent filing to approval for oncology drugs in 2015 was 9.5 years, down from 10.3 years in 2013.
  • In the past three years, three molecules were approved within four years of patent registration.
  • The overwhelming majority of drugs are available in the U.S., Germany, UK, Italy, France and Canada.
  • Of the drugs approved in 2014 and 2015 by a set of developed countries analyzed, only the U.S., France and Scotland have more than half included on reimbursement lists at the end of 2015.
  • The annual growth rate in cancer drug costs has risen from 3.8 percent in 2011 to 11.5 percent in 2015.
  • The U.S. now accounts for about 45 percent of the global total market for therapeutics, up from 39 percent in 2011 (due in part from a stronger U.S. dollar and more rapid adoption of newer therapies).
  • Cancer drugs now make up 11.5 percent of total drug costs, up from 10.5 percent in 2011, in the United States.
  • Net price growth in the U.S. on existing branded oncology drugs have averaged an estimated 4.8 percent in 2015, compared with 6.4 percent invoice price growth.
  • Cancer drugs dispensed in the United States through retail channels now account for more than one-third of total costs, up from 25 percent ten years ago.
  • Average total treatment costs in the U.S. for patients in commercial insurance plans with a cancer diagnosis who are receiving active treatment reached $58,000 in 2014, up 19 percent from 2013.
  • Patients with commercial insurance who were treated in 2014 with cancer drugs received by injection or infusion were responsible for more than $7,000 of costs on average, compared to $3,000 for those patients receiving only oral medicines.

This report was effectively released right before the key ASCO conference this weekend.

I'm interested in the Newsletter