Increasing Use of Generic Drugs Slows Prescription Prices
While the cost of private health care in the US is on a constant climb, the price of prescription drugs is, perhaps surprisingly, increasing at a much slower rate. In actual fact, yearly increases in the cost of drugs are at their lowest since the late 1970s - when the present method of price-tracking was first put into operation. Between September 2006 and 2007, a one per cent increase was observed, as detailed in key data released by the US government on the 19th September 2007. Just two years ago, the rate was 4.4 per cent.
According to economist Daniel Ginsburg, who works at the Bureau of Labor Statistics: "The way the index is going, it looks like drug price increases are not going to be very painful this year."
The more gradual movement is being achieved in some degree by the prevalence of generic drugs supplied by countries such as India and Israel. Since early 2006, generic adaptions of popular drugs such as Norvasc and Ambien have joined the market. Additionally, the Wal-Mart chain has slashed the price of generic prescriptions in-store to $4 per month. Other retailers are set to implement similar measures.
Despite these factors, the expectancy is that drug spending will reach $500 billion per annum by 2017 - fuelled by greater demand, and the introduction of new drugs. Within this, specialised demands are likely, in respect of e.g. cancer treatments.
In 2006, generic drugs accounted for 63 per cent of the prescriptions issued stateside - a 13 per cent increase. A year down the line, the largest supplier of these drugs in the US is the Israeli Teva Pharmaceuticals firm.
Health insurance group Medicare backs the increasing adoption of generic drugs, as do pharmacy benefit managers. In the case of the latter, as per the New America Foundation's health policy director - Len Nichols - their purchase is being incentivised through a tiered co-payments directive. In this way, consumers are able to pay reduced rates for the least expensive treatments, and increased rates for expensive, traditional non-generics. "My guess is that the increasing market share of generics, driven largely by firms using two- and three-tier pricing - that's what's slowing us down over time", said Mr Nichols.
Source - Pharmaceutical International's US Correspondent
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