DRUG COSTS II: Rx Drug ‘Crisis’ Spurred by Politicians
In a frenzy of heated public debate, Republicans and Democrats have both issued plans to assuage the impending prescription drug "crisis" in the United States today, although, according to some researchers, seniors' spending on drugs "hardly hints at a national crisis," Investor's Business Daily reports. While prescription drug prices have risen faster than the inflation rate, "the media on a daily basis are confusing the issue between prices and (overall) costs (to consumers). The costs of drugs are rising rapidly in this country, but the price of drugs -- especially brand-name drugs -- is hardly rising at all," Dr. Bert Spilker, a senior vice president at the Pharmaceutical Research and Manufacturers of America, said. A PhRMA spokesperson, citing industry pricing expert IMS Health, added that, while money spent on drugs swelled by 18% last year, most of the increase was due to a rise in demand. Also, nearly two-thirds of seniors have some form of coverage for prescription drugs, as private, third-party payers have moved to "pick-up" drug costs at the pharmacy. Drugs also have delivered better "health outcomes" for patients; according to a study conducted several years ago, "each extra dollar spent on drugs reduced hospitalization costs by $3.50."
Democratic Study Full of Holes
Democratic staff of the House Government Reform Committee claim, however, that pharmaceutical firms engage in "gross price discrimination" against seniors without drug coverage. The committee also contends that U.S drug prices compare unfavorably with those of other countries. But based on a study by Wharton School Professor Patricia Danzon, "U.S. prices for drugs tended toward the middle among developed countries," 3% less than prices in Canada based on U.S. consumption patterns (Murphy, 5/4).