The Cost of Prescriptions

The Cost of Prescriptions

The cost of prescriptions has risen dramatically in the last several decades. The average price for a single prescription in the USA in 2004 was $55. By 2006, this average cost had risen to $75. In the California Medicaid Sector, the average charge was over $80, with generic products being under $40 per prescrip-tion and brand-name products over $140. This rise is occasioned by new technology, marketing costs, and stockholder expecta-tions. The pharmaceutical industry typically posts profits of 10-15% annually, whereas the retail business sector shows a 3% profit. The cost to the patient for many new drugs such as sta-tins exceeds $1000 per year. The cost of some therapeutic anti-body products (eg, MABs) is more than $10,000 per year. Pharmaceuticals tend to be the highest out-of-pocket health-related cost because other health care services are covered by health insurance, whereas prescriptions often are not, although this is changing.

Because of public and political pressure resulting from this problem, the US Congress enacted the Medicare Modernization Act in 2003 establishing the Medicare Part D plan. This voluntary prescription plan provides for partial payment by private medical insurance companies for some prescriptions for patients who are Medicare-eligible. Unfortunately, the complexity of the legisla-tion and the resulting confusing insurance plans with gaps in coverage, formulary and quantity limits, and the favored eco-nomic treatment given the pharmaceutical industry, prevent this plan from solving the high drug cost problemHigh drug costs have caused payers and consumers alike to do without or seek alternative sources. Because most other gov-ernments, eg, Canada, have done a better job in controlling drug prices, the prices for the same drug are usually less in other coun-tries than those in the United States. This fact has caused a num-ber of US citizens to purchase their drugs “off-shore” in a variety of countries for “personal use” in quantities up to a 3-month supply—at substantial savings, often as much as 50%. However, there is no assurance that these drugs are always what they are purported to be, or that they will be delivered in a timely man-ner, or that there is a traditional doctor-pharmacist-patient rela-tionship and the safeguards that such a relationship offers.

Without a true universal health care program, the cost of drugs in the USA will continue to be subject to the negotiating power (or lack thereof) of the purchasing group-insurance company, hospital consortium, HMO, small retail pharmacy, etc, and will be driven primarily by the economic policies of the large manufacturers. In most companies, these policies favor executive compensation and stockholder dividends above the interests of consumers or employees. Thus far, only the US Veterans Administration system, the larger HMOs, and a few “big box” stores have proved strong enough to control costs through bulk purchases of drugs and seri-ous negotiation of prices with manufacturers. Until new legisla-tion gives other organizations the same power to negotiate, or pricing policies are made more equitable, no real solution to the drug cost problem can be expected.