Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Ken Johnson blasted a study in the Journal of the American Medical Association on brand-name medicines and generic drugs. “The contention that brand-name medicines drive up the cost of health care is fatally flawed.” The growth of prescription drug costs in the U.S. has been modest, as evidenced by Centers for Medicare and Medicaid Services data showing that drug price growth was 1.4% in 2007. CMS has also reported that in 2006, prescription drug spending grew at its second lowest level in 11 years. In fact, medicines accounted for roughly 10% of total health spending in the U.S. in 2006 – the same proportion as in 1960.
She said that price trends for brand-name medicines are influenced by many factors, including the significant investment required to research and develop and gain regulatory approval of an innovative drug.
It takes an average of 10 to 15 years to develop a new medicine from the earliest stages of discovery through Food and Drug Administration approval. And only two of every 10 drugs that reach the market ever earn back enough money to match or exceed the average R&D cost of getting them to the marketplace.
What’s more, by the time a medicine makes it through the entire development process, a pharmaceutical innovator often has a limited number of years to recoup its investment and generate the funds needed to re-invest in research and development.
In addition, pharmaceutical prices in America today are determined by market transactions and health plans and payors are able to negotiate for discounts. The plans bring powerful tools to their side of the price negotiations, including the fact that they are negotiating on behalf of millions of patients and can decide whether to cover a drug and the extent of the coverage. For more information, visit www.pparx.org.
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1 comment:
I am often asked why drugs are so expensive. I hope article helps answer your questions.
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