Drug spending up 17 percent - Washington Post
For the fourth straight year, prescription drug spending rose more
than 17 percent in 2001, driven in large measure by a few heavily
advertised, high-priced medications, a nonpartisan study released
yesterday found.
Sales of prescription medication at retail stores and through mail-order
companies totaled $175.2 billion last year, an increase of $27 billion
over 2000, according to the National Institute for Health Care Management.
The institute is a private, nonprofit research organization led
by physicians, insurance executives and policymakers from both parties.
Overall, pharmaceutical costs continue to be the fastest-rising
component of health care expenditures, accounting for about 10 percent
of spending. Although price increases were part of the reason for
the jump, the researchers found that drug use and advertising were
also prime factors. In short, more doctors are writing more prescriptions
for the most expensive, heavily marketed drugs.
While the trend was criticized by some consumer advocates and politicians,
pharmaceutical makers and some economists said today's blockbuster
drugs save not only lives, but also dollars.
"Although we talk about how fast drug costs are going up,
this is helping to reduce the rate of growth of other medical costs,"
said Frank Lichtenberg, an economist at Columbia University's business
school.
In a number of studies, Lichtenberg has found that modern medications
help people live longer, with a better quality of life, so they
spend less time in hospitals and more time contributing to society.
"Ultimately, they provide tremendous benefits to society,"
he said.
The lobbying group Pharmaceutical Research and Manufacturers of
America (PhRMA) issued a response detailing situations in which
new drug therapies often eliminate the need for most expensive care.
Those include cholesterol reducers, or statins, that lower heart
disease, treatments for diabetes and asthma, and antidepressants.
"You get a heck of a return on your investment," said
Lee C. Vermeulen Jr., director of the Center for Drug Policy and
Clinical Economics at the University of Wisconsin Hospital. He said
employers and government officials, who pay a large share of the
medical bills, should recognize that investing in costly medication
can translate into fewer sick days.
Nevertheless, he said there is plenty of waste in the pharmaceutical
industry and "ridiculous" decisions by doctors and patients
about which medication to use when. Take the people who insist upon
eating fatty foods late at night and never exercise, he said.
"They don't want to lose weight or change their diet or take
Tums. They're pummeled by advertising, so they go to the doctor
demanding" a prescription medication such as Prilosec or Prevacid,
he said. "That's a waste."
Frank Clemente, director of Public Citizen's Congress Watch, said
few doubt the value of the latest medical advances, but he believes
it appears the industry is price-gouging.
"The prices are greatly in excess of what they need to have
research and development dollars," he said. On average over
the past decade, the pharmaceutical industry has been the most profitable
by far, he said, reporting profits about three times the size of
other Fortune 500 industries.
With so much money at stake, both sides have invested heavily in
shaping public opinion.
The National Institute for Health Care Management, the author of
the report, receives funding from the federal government and insurers.
Researchers such as Lichtenberg and Vermeulen said they are subsidized
by drug manufacturers.
Both Clemente and Sen. Edward M. Kennedy (D-Mass.) said yesterday's
report highlights the need for a broad Medicare drug plan. Senior
citizens, the nation's major health care consumers, will spend about
$82 billion on prescriptions this year and up to $105 billion in
2004, the study projects.
"Rising prices put lifesaving drugs increasingly beyond the
reach of most senior citizens, so we can't afford to wait,"
Kennedy said.
Last year, about three dozen drugs were responsible for half the
total increase in expenditures, according to yesterday's study.
Americans consumed record quantities of well-known drugs such as
Prozac, Lipitor and Prilosec to treat depression, high cholesterol
and heartburn, respectively.
Antidepressants remain the top-selling therapeutic class, with
$12.5 billion in retail sales.
The average price for a prescription rose 10 percent, from $45.27
to $49.84, the study found. The average price among the 50 best-selling
drugs was $71.56.
In many categories, two or three medications dominated the market.
Nearly 75 percent of the prescriptions written to treat heartburn
were for Prilosec or Prevacid, for instance.
The study hints at other trends that alarmed Nancy Chockley, president
of the foundation that conducted the research.
She sees an industry that is increasingly focused on retooling
existing successes — dubbed "me-too drugs" —
rather than taking the costly risks that may lead to new cures.
Schering-Plough, for example, has heavily promoted its new antihistamine
Clarinex in the hopes of retaining market dominance when its predecessor,
Claritin, goes off patent.
With the patent on Prilosec due to expire, Chockley said, AstraZeneca
poured $126 million into advertising its new purple heartburn pill,
Nexium.
"They are protecting the market share of these large blockbuster
drugs by coming out with a slightly changed version," she said.
PhRMA spokeswoman Jackie Cottrell rejected the notion of "me-too"
drugs, saying that even small advances can be significant.
"What might be considered a minor improvement for some might
be a major improvement for others," she said.
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