How to Predict Drug Expenditure: A Markov Model Approach with Risk Classes.

Background: Although pharmaceutical expenditures have been rising for decades, the question of their drivers remains unclear, and long-term projections of pharmaceutical spending are still scarce. We use a Markov approach considering different cost-risk groups to show the possible range of future drug spending in Germany and illustrate the influence of various determinants on pharmaceutical expenditure.

Methods: We compute different medium and long-term projections of pharmaceutical expenditure in Germany up to 2060 and compare extrapolations with constant shares, time-to-death scenarios, and Markov modeling based on transition probabilities.