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Study: Drug costs rise 18%
© St. Petersburg Times, published May 8, 2001 WASHINGTON -- Americans spent nearly $132-billion on prescription drugs last year, or about 18.8 percent more than in 1999, according to a new study. The rise was caused by a combination of higher prices, increased drug usage and a preference for newer, more expensive medicines. This is bad news for everyone who depends on prescription drugs -- even those whose drug costs are covered by insurance -- because it portends higher prices for health insurance and medical care in general. It is most discouraging, of course, for 23-million Americans who have no drug benefits, including 11.5-million age 65 and older who depend on Medicare.
"Prescription drugs are the best value in health care today," declared Alan F. Holmer, president of the Pharmaceutical Research and Manufacturers of America. Drug manufacturers were not directly responsible for most of the increase. Less than one-quarter of the expenditures was attributed to rising prices set by the manufacturers. The average retail drug price climbed 10.5 percent last year, from $40.96 to $45.27, and the average price for the 50 best-selling drugs reached $67.15. The survey found spending also grew because more people are taking larger numbers of prescription medicines and they usually favor the higher-priced new drugs over cheaper generics. About 42 percent of the total increase of $20.8-billion was attributed to the growing number of prescriptions dispensed; 36 percent stemmed from a shift from lower to higher priced drugs; and 22 percent went for higher prices. Half of the total increase in spending could be traced to just 23 popular drugs, including Vioxx, Lipitor, Prevacid, Celebrex, Avandia, Actos and OxyContin. Spending on the 50 most popular drugs rose by 40 percent, while spending on all other drugs increased only 7.9 percent. To demonstrate the price differential between old and new drugs, the report said the average price of Lipitor, the cholesterol reducer, was $82.58 last year, compared with an average price of $71.89 for its predecessor drugs in 1998. Likewise, Glucophage, used to treat diabetes, costs an average of $63, compared to $27.27 for older drugs, and Prempro, the estrogen replacement therapy, averaged $34.06 last year, compared to $26.53 for earlier versions. As a result of this trend, lawmakers in both Washington and Tallahassee are trying to discourage people from using new, more expensive drugs when there is a generic alternative available. Just last week, the Florida Legislature sent a bill to Gov. Jeb Bush that would instruct pharmacies to substitute a generic for four popular brand-name drugs, including the blood thinner Coumadin. Bush has not said whether he will sign the measure. With drug expenditures rising at such a fast pace, it surely will be much more difficult for Congress to create a prescription drug benefit for Medicare patients. The only way lawmakers would be able to contain costs under these circumstances is to reimburse seniors only for a fixed amount of their total drug bill or require large co-payments. Despite the burden it will put on the government, Democratic Sen. Bob Graham of Florida said the new survey proves why seniors need a prescription drug benefit. "This increase is all the more reason to enact a comprehensive, affordable universal prescription drug benefit for Medicare beneficiaries this year," he said. The increase in drug expenditures in 2000 is consistent with those in recent years. According to earlier surveys conducted by NIHCM, a non-profit think tank that receives funding from government and foundations, as well as Blue Cross-Blue Shield, the increases were 13.2 percent in 1996, 13.9 percent in 1997, 15.4 percent in 1998 and 19 percent in 1999. To demonstrate how these costs would affect the government if Congress adopted a drug benefit for seniors, authors of the survey noted that Medicaid spending on prescription drugs more than tripled over the past decade. In Florida, for example, outpatient prescription drugs were responsible for 8 percent of Florida's total Medicaid bill. The Federal Employee Health Benefits Program, which many members of Congress hope to use as a model for adding drug benefits to Medicare, reported that the average premium increased 10.5 percent this year, and more than 40 percent of that could be attributed to rising drug costs. The fastest growing drug last year was Vioxx, which is manufactured by Merck to treat arthritis. Its average price was $79.17. Spending on Vioxx, which was introduced in mid-1999, more than quadrupled to $1.5-billion in 2000. In fact, Vioxx alone accounted for nearly 6 percent of the overall increase in spending on prescription drugs. At the same time, the fastest growing category of prescription drugs was anti-depressants, where spending rose nearly 20 percent. Spending for Prozac, the top-selling anti-depressant manufacturered by Eli Lilly, continued to climb, but its market share eroded somewhat in response to competition from other anti-depressants, including Zoloft, Paxil, Wellbutrin and Celexa. Because the patent on Prozac is scheduled to expire next August, Eli Lilly has started to market a newly patented form of Prozac that must be taken only once a week. Prozac also is being marketed under a new patent as Serafem, which is prescribed for premenstrual symptoms. Lipitor, the anti-cholesterol drug manufactured by Pfizer, was second only to Vioxx in boosting spending on prescription drugs. Lipitor and two other cholesterol-lowering drugs -- Zocor and Pravachol -- accounted for 8.5 percent of the rise in drug spending in 2000. Zocor's average price was $112.36; Pravachol's $96.96. Drugs that treat ulcers and other gastrointestinal conditions were second to anti-depressants in overall spending. This includes Prilosec, the top-selling prescription drug, at an average price of $138.57, and its main competitor Prevacid, at $125.98. Sales of drugs to treat acute and chronic pain rose 32 percent, according to the study. The most popular of these is OxyContin, manufactured by Purdue Pharma, whose sales grew 90 percent. OxyContin has received considerable publicity recently because it is being sought after by drug abusers. Its average prescription price was $189.01. Viagra, the drug designed to treat sexual dysfunction in men, was 27th on the expenditures list. The average retail price for Viagra was $65.99, up less than one percent from the previous year. Experts predict outpatient spending on prescription drugs will continue to increase between 12 percent and 23 percent a year, at least through 2004.
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From the Times wire desk
From the AP |
The pharmaceutical industry promptly attacked the findings published by the National Institute for Health Care Management, noting that another study has found drug spending was up only 14.7 percent last year.
