US Healthcare Spending to Rise by 4% in 2016, According to The Economist
Mar 06, 2016
Post by Adam Curran
Healthcare spending as share of GDP in the States is 17%. No surprise that spending on healthcare in the US is higher than anywhere else in the world. InThe World in 2016 by The Economist, it states that health-care spending will rise by 4% in dollar terms in 2016. This provides health and pharma businesses a reason to celebrate, seeing that the industry is facing these factors:
Aging – although it’s good news that people are living longer globally, this will inevitably cause a strain to healthcare systems as a greater proportion of the population is aging. Global life expectancy is set to rise to 72.7 years this year.
Population growth – as well as people living longer, there is also the increase in population. Current population globally is set at around 7.4 billion (check out the latest figures here). More people in world means a greater strain on health-care
Better (pricier) treatments – drug development continues to be expensive business. Research is becoming increasingly expensive, it takes around a decade to get a new drug approved and it can cost well over $1 billion (this also includes development costs for the many drugs that don’t get approved). Source
Spread of health-care systems – health networks are looking to spread in India as the country goes towards creating an insurance-based system, and China is extending its coverage more into the countryside. There is also expanded coverage under the Obamacare reforms.
Although the spread of healthcare systems is going to improve the lives of many, Governments will be monitoring treatment providers to show value in what they do while reducing costs. This reluctance to spend money unnecessary by keeping costs to a minimum is likely to hit drug companies the most. This is why it is going to be vital for pharma companies to have strong eClinical solutions to help control costs and improve drug-to-market times.
As we mentioned in another blog post, the CTMS market is looking to become a $2 billion market by 2019. CTMS technologies have come a long way over the last ten years. A full-featured CTMS system can be used to plan, track, execute and control almost every activity conducted in a clinical trial. When configured to integrate with other eClinical applications, greater savings and efficiencies can be achieved.
The Economist ends by saying that despite some big patents expiring in 2016 and cutting down of costs, innovation will continue. The US managed to approve 41 new drugs in 2014, which is the most for 18 years.