U.S. Retail Prescription Drug Spending Increased More Than 17% in 2001, Study Finds
U.S. prescription drug spending rose more than 17% in 2001, driven largely by several "heavily advertised, high-priced" treatments, according to a study released yesterday by the National Institute for Health Care Management. The Washington Post reports that the study found that spending on prescription drugs at retail stores and through mail-order pharmacies rose to $175.2 billion last year, an increase of $27 billion from 2000 (Connolly, Washington Post, 3/29). The study also found that retail spending on prescription drugs has nearly doubled over the past five years, from $78.9 billion in 1997. According to the study, an increase in the sales of a "relatively small number of drugs accounted for much of the ... increase." Fifty of the 9,482 prescription drugs on the market, including the cholesterol drugs Lipitor and Zocor, had an average price of $71.56 in 2001, compared with $40.11 for other treatments. The study found that sales of the 50 drugs rose 34.3% in 2001, compared to 9.3% for other treatments. The rise in sales of those 50 drugs was responsible for 62.3% of the spending increase last year. Pharmacies also dispensed 25.4% more of the 50 drugs last year than the year before, compared with only 1.7% more of other treatments, the study found (NIHCM release, 3/29). NIHCM President Nancy Chockley said, "This is similar to what we saw last year, which is that a few drugs are really driving things, but this year, it's even more concentrated" (Powell, Boston Herald, 3/29). Steven Findlay, lead author of the study, said that an increase in the number of individuals who take prescription drugs contributed to the rise in prescription drug spending in 2001. He added, "There is also heavy marketing of these drugs and, to a lesser extent, the pharmaceutical industry tries to preserve its patents and brand-name drugs at expensive prices" (Appleby, USA Today, 3/29).
Several consumer advocacy groups criticized the study's findings and accused the pharmaceutical industry of "price-gouging" patients (Washington Post, 3/29). Sidney Wolfe, director of Public Citizen's Health Research Group, attributed a large part of the increase in prescription drug spending to "aggressive" advertising campaigns by drug companies (Carroll, Wall Street Journal, 3/29). According to Robert Restuccia, president of Health Care for All in Massachusetts, physicians prescribe drugs "that people don't necessarily need, and you see drugs not being taken appropriately" as a result of advertising by pharmaceutical companies (Boston Herald, 3/29). However, drug industry officials said that the study "reflects that more people are being treated for diseases" and "noted how medicines can help avoid more expensive treatments" (Agovino, AP/Philadelphia Inquirer, 3/29). Pharmaceutical Research and Manufacturers of America President Alan Holmer said that the study shows that "more people are getting the treatment they need" (Silverman, Newark Star-Ledger, 3/29). Frank Lichtenberg, an economist at Columbia University, added, "Although we talk about how fast drug costs are going up, this is helping to reduce the rate of growth of other medical costs" (Washington Post, 3/29).
The Wall Street Journal reports that the study may prompt calls for Congress to add a prescription drug benefit to Medicare (Wall Street Journal, 3/29). Sen. Edward Kennedy (D-Mass.) said that the study "highlights the need for a broad Medicare drug plan." According to the study, seniors will spend about $82 billion on prescription drugs this year and as much as $105 billion in 2004 (Washington Post, 3/29). The study also raises concerns about "further big increases" in health insurance premiums. However, a spokesperson for the American Association of Health Plans said that although prescription drug costs contribute to increased health insurance premiums, lawsuits and government regulations also "drive up" the cost of premiums (Wall Street Journal, 3/29). The rise in prescription drug spending also has contributed to increased costs for state Medicaid programs and state employee health plans, "which are straining many state budgets," the New York Times reports (Freudenheim, New York Times, 3/29). The study is available online. Note: You must have Adobe Acrobat Reader to view the study.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.