Healthy Skepticism Library item: 19544

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: Report

Mullins CD, Palumbo F, Stuart B,
The Impact of Pipeline Drugs on Pharmaceutical Spending
Center on Drugs and Public Policy University of Maryland School of Pharmacy 2000 Apr 13
www.ahipresearch.org/PDFs/25_ExecSumImpactofPipelineDrugs.pdf

Abstract:

National expenditures on pharmaceuticals have risen at over 10 percent annually for the last several years. Advances in pharmaceutical technology are helping millions of Americans. This translates into innovative new drugs; some of which are more expensive than the drugs they replace, some of which will be used by more people, and others which represent entirely new therapies. Providing consumers with these therapies is placing increasing demands on the resources available for health care. As drug spending increases, it will affect consumers and public and private sponsors of health care. The future level of pharmaceutical spending is also important background information for Congress to consider as it develops legislation to help seniors with their drug purchases.
Our research indicates that total expenditures on pharmaceuticals are likely to increase by more than 15 percent annually over the next five years. This would cause prescription drug spending to double from an estimated $105 billion in 1999 to $212 billion in 2004. We attribute 40 percent of this increase to the cost of “pipeline” drugs. Some of this increased spending will be for breakthrough drugs for conditions for which no current treatment exists, and some will be for drugs that will replace existing therapies. We attribute the remaining 60 percent of the projected increase in expenditures to increases in prices and utilization of drugs already on the market.
Our study looks at a variety of factors that influence both the price (and price increases) of existing and new drugs and the quantity of pharmaceuticals that are purchased. The study also examines pipeline drugs and drug classes that may create demand for new treatments and may result in more patients receiving treatment.