Pharmaceutical Spending Continues Steady Increase

By Ceci Connolly

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.

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.

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.

Washington Post March 29, 2002; Page A09

DR. MERCOLA'S COMMENT:

It is a sad but not unexpected tragedy that our drug use is being extended to children. Americans had more than 3 billion prescriptions filled last year.

On the average that is one prescription for every man woman and children in the US every single month.

Like the late Senator Everett Dirksen from Illinois was fond of saying when he was referring to the Defense Department budget, a billion dollars here, a billion dollars there and before you know it you are talking real money.
Retail pharmacies filled 3 billion prescriptions in 2000.

Well we are talking a lot more than a few billion dollars. How about something like a nearly 200 billion dollars for drugs spent last year.

The sad tragedy is that we are spending all of this money on disease management focused on drugs and our return on this investment is profoundly poor.

Clearly there is something seriously wrong here.

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Health Spending Growing Faster Than US Economy

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