More about Drug Prices
I just want to add a short follow-up on earlier discussions about drug prices. The other day (Wednesday, August 9, 2017, pages B1 and B3), there was a very interesting article in the NYT. The article was entitled “The Brand X factor,” and was written by Charles Ornstein and Katie Thomas. The authors summarized the latest information about generic drug prices. The good news is that generic drug prices have been dropping a bit. But, drugs with no competition, generic or brand name, continue to be very pricey. The most amazing thing to me is the fact that although generic drugs account for 89% of all prescriptions, in 2016 they accounted for only 26% of the costs. Another way to think about it is that 11% of prescriptions accounted for 74% of all drug costs. Part of the reason for these astonishing statistics is that many insurers have gone to covering only expensive brand name drugs for certain medical conditions. In addition, you may have noticed all the TV and magazine advertising for some brand name drugs for treating psoriasis, dry eye, etc. I can assure you that such advertising is only for very, very expensive medications. Some of them are one-of-a-kind drugs, but others are drugs that have competition. But pharmaceutical companies have learned that competing by price, generally leads to a “price war,” and the safer approach is to match the prices of the competitors and advertise that your brand is best. The only people who suffer from all of this stuff are the patients. We need to find a way to do better for patients, and that includes incentives for pharmaceutical companies to continue finding new and better medications to treat what ails us.
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