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CMS' Bright Future for Drug Spending in 2020

The boffins at the Centers for Medicare and Medicaid Services (CMS) just released their new, post-health care reform forecasts for national health expenditures (NHE). You can read the full Health Affairs article here: National Health Spending Projections Through 2020: Economic Recovery And Reform Drive Faster Spending Growth (free download).

My number crunching highlights the good news for the pharmacy and pharmaceutical industries:

  • Annual prescription drug expenditures will double in the next 10 years to $512.6 billion by 2020.
  • Drug spending growth will grow at a compound average rate of 7.1% from 2010 to 2020—faster than overall health expenditures. As a result, prescription drug spending is projected to be 11.1% of NHE vs. 10.1% today.
  • Health care reform will add an extra $35.2 billion in annual drug spending by 2020.
Despite the near-term patent loss gloom, CMS provides plenty of reasons to be cheerful about the future of the pharmaceutical industry, even if you don't study nuclear science and love your classes.

Tomorrow, I’ll look at the surprising changes in payer mix buried in the CMS data.
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