Aging Baby Boomers

According to the U.S. Census Bureau's Global Population Profile: 2002, the global cohort of people aged 65 and older will grow 89% during the 2002-2025 period -- from 440 million people to 833 million people. Total global population is expected to rise only 26% during that same period. Moreover, expected growth is likely to occur in the developing world, where birthrates are higher and birth control methods less widely used than in more developed economies.

Approximately 293 million people live in the U.S. today, according to Census Bureau estimates. Bureau projections estimate that the over-65 segment will almost double from approximately 35.6 million in 2003 to about 62.6 million by 2025. This represents an increase in senior citizens from approximately 12.6% in 2003 to over 18.5% in 2025. While the overall population is expected to grow only 21%, seniors are projected to grow almost 80%. This same cohort also consumes approximately 40% of U.S. pharmaceutical products, according to S&P.

In addition, between 2005 and 2010, another segment, the 45-to-64 age group, will be the fastest growing cohort and will begin to consume prescription drugs with increased frequency. There were over 67 million people in this category in 2003.

Extended life expectancy

In 2001, life expectancy in the U.S. was 77.2 years, compared with 74.1 years in 1981 and 68.4 years in 1951, according to the Division of Vital Statistics (part of the National Center for Health Statistics). According to a UN report, American life expectancy is projected to reach 79.1 years between 2020 and 2025. It's a virtual axiom that with increasing age will be increased consumption of prescription medicines.

Growing chronic diseases

The World Health Organization estimates that chronic diseases -- such as cancer, heart disease, and respiratory and infectious diseases -- account for approximately 43 million deaths annually, a figure that is likely to increase as a result of smoking, poor dietary habits, and sedentary lifestyles. Increasingly, pharmaceuticals are being used to control the adverse effects of these chronic diseases, enhance quality of life, and lengthen life spans. Cancer, CNS (central nervous system) conditions (e.g., depression, anxiety, psychosis), gastrointestinal and cardiovascular diseases are conditions where patients have greatly benefited from prescription medicines. The industry currently has over 800 medicines in development to treat diseases associated with aging (e.g., Alzheimer's disease, heart disease, diabetes, and cancer).

As we noted, people are taking more drugs for a variety of reasons. It is undeniable that extensive advertising of mass-marketed drugs is prompting people to request drugs from their physicians. With consumers generating demand, doctors are increasingly confronted with patients requesting specific drugs during a consultation, effectively turning the physician-patient relationship on its head. But other factors are at work here. Doctors are prescribing more prescription medicines as a first-line of defense against chronic conditions, since they are less expensive than hospitalization, physician services and rehabilitation. Newer drugs often have more attractive side effect profiles (e.g., drugs for psychoses). Drug treatments are now available for previously untreated conditions, such as Alzheimer's disease, sepsis (commonly known as blood poisoning), and HIV/AIDS. Chronic diseases, such as high blood cholesterol, hypertension, diabetes, depression, and asthma are now easily treated pharmacologically.

Apart from being good for the bottom line, the increased used of medicines will have important consequences for consumers. First, morbidity and mortality will be reduced. According to a study by the London-based Office of Health Economics, pharmaceuticals will account for 10 to 40 percent of future reductions in heart disease mortality; 15 to 40 percent in cerebro-vascular disease; 28 to 65 percent in breast cancer; and 3 to 26 percent in lung cancer. Second, medical costs will be reduced. According to estimates by the Cambridge, MA-based National Bureau of Economic Research, replacing older medicines with newer ones increases drug spending by an average of $18 but reduces other healthcare costs by $129, resulting in a net saving of $111. Finally, greater use of medicines will create an increased quality of life for consumers. Industry studies claim that newer medicines contribute to reduced hospitalizations and surgery, fewer adverse effects from medication, decreased complications of disease, and increased worker productivity. Current seniors and aging Baby Boomers will likely remain more independent longer and require expensive nursing care later in life than their parents' generation.