Healthy Skepticism Library item: 1736

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Freudenheim M.
Drug Spending Rises Sharply At Pharmacies and by Mail
The New York Times 2002 Mar 29
http://select.nytimes.com/gst/abstract.html?res=F30B13FC345F0C7A8EDDAA0894DA404482

Full text:

Spurred by heavy advertising for a handful of blockbuster products and a jump in prices, consumer spending on prescription drugs at pharmacies rose more than 17 percent last year, to $154.5 billion, according to a new study. Mail-order drug sales rose 27 percent, to $20.7 billion.

Price increases generated 37 percent of the $22.5 billion increase in drug sales, the study said, and the rising number of new prescriptions accounted for 39 percent. The rest of the increase was attributed to a shift to costlier drugs, it said.

The sales increases were led by two cholesterol treatments, Lipitor, the nation’s largest-selling drug last year, with sales of $4.5 billion, and Zocor, with $2.7 billion. Lipitor is made by Pfizer, and Zocor by Merck.

Other products propelling the sales increases included Vioxx, a Merck drug for arthritis; OxyContin, a painkiller made by Purdue Pharma; Zyprexa, an Eli Lilly drug for schizophrenia; and Celexa, a Forest Laboratories drug for depression.

Sales of the 50 drugs that had the biggest price increases rose 34 percent, on average, in 2001. The average increase in sales was 9 percent for 9,400 other drugs tracked by the study.

Spending on drugs, long the fastest-growing component of health care, have been rising 17 percent or more a year since 1998, according to the National Institute for Health Management, the nonprofit research group behind the study.

The rising number of prescriptions, reflecting drug industry marketing to doctors and consumers, was still the main ingredient in increased spending on drugs, the study said, but price increases played a larger role last year.

Price increases, which had averaged 3.6 percent a year since 1993, jumped to 5.97 percent in December 2001, more than triple the inflation rate of 1.6 percent reported by the Bureau of Labor Statistics.

Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said drug companies had announced price increases on several products since January.

Among the reasons, Dr. Schondelmeyer said, were efforts by drug makers to raise prices ahead of possible government restrictions and before blockbuster drugs lost patent protection.

As patents expire on several best sellers, including the cholesterol drugs and the allergy drugs like Claritin, they face competition from cheaper generics and nonprescription versions.

Schering-Plough, which makes Claritin, has raised that drug’s price eight times in the last two years, Dr. Schondelmeyer said.

Nancy Chockley, president of the institute, which is financed by Blue Cross and Blue Shield health plans, said the relative economic importance of a few dozen drugs offered opportunities for states and other large buyers to control their spending.

“They can concentrate on finding cost strategies for just those drugs,” Ms. Chockley said.

Drug costs play a big part in the rising costs of Medicaid and state employees’ health benefits, which are straining many state budgets.