What is the average cost of prescription drugs in 2010

A multiple-sclerosis drug saw spending rise more than 30, percent. There's a lot less in some people's wallets because of rising drug prices. VIDEO The report also noted that 64 specialty drugs that have been on the market since saw price increases of an average of percent between their introduction and Another study from Express Scripts found that about , Americans incurred drug costs of "more than the median household income As medicines that could treat 3.

In addition to the impact of these costs for individual patients, increasing use of specialty drugs could also raise premiums and deductibles for others and present budgetary challenges for governments. Generic drugs, or off-brand versions of brand-name drugs, "account for about 80 percent of all prescriptions.

While the price of a brand-name drug tends to increase over the length of its patent, generic drugs see quick drops in price and end up much cheaper—a generic drug may cost as low as 20 percent of the price of its brand-name counterparts. Because of their wide affordability, recent spikes in the prices of certain generic drugs caused widespread alarm. Some researchers found that beyond the spikes, generic drug prices in general have increased.

Truveris, a research firm, found that prices for generic drugs rose by 3 percent in and 4. Drug Channels , a pharmaceutical economics blog, found that while generic drug prices declined by 3 percent in , there was no change in prices in , and 50 percent of generics saw price increases. However, an agency within the U. Department of Health and Human Services HHS found that despite the "spikes in the prices of some generic drugs," two-thirds of generics saw price decreases in , and "generic drug prices are not an important part of the drug cost problem facing the nation.

In general, any price increases occurring within the generic drug market have been attributed to product shortages and decreased competition due to mergers and acquisitions.

One reason given for the high prices of brand-name and specialty drugs is the costs associated with researching and developing new medicines. Such costs are affected by the complexity of the drug and changes in federal regulation over time.

For instance, Express Scripts contends that pharmaceutical companies on average spend more on advertising and marketing than they invest in research and dedicate "[o]nly about 15 percent" of their budget to developing new drugs. To allow prescription drug companies to recoup the cost of their investment, the federal government awards them patents for their drug that give them exclusive rights to produce and sell the drug for 20 years.

Patents are typically approved while the drug is still in development, and by the time a drug is marketable, eight to 12 years may have elapsed on its patent, shortening the time to recoup the investment and incentivizing higher prices. Brand-name drugs also often increase in price as the patent expiration date draws closer.

Additionally, between and , many major pharmaceutical companies had popular, widely sold drugs go off-patent, leading to large losses. According to Drugsdb. While drugs are under patent, their makers essentially hold a monopoly and do not face direct competition for the drug. Some argue that this monopoly allows drug companies to charge "[w]hat the market will bear," or what consumers, insurers and governments are willing to pay.

For a drug with little competition, the price those entities are willing to pay may be higher than it would be otherwise. Similarly, in and there was a wave of mergers and acquisitions in the pharmaceutical industry; such consolidation may increase a company's drug prices due to greater "pricing power it may have when negotiating with payers.

Rather than basing drug prices on the cost of research and development, some health economists argue that pharmaceutical companies price drugs based on a calculation of their value to the healthcare system. To determine the value of a new medication for a particular illness, a company may calculate the current cost of the illness to the healthcare system.

This would include the cost of surgeries, "clinical services, hospitalizations, and other less effective medications that untreated patients would otherwise incur. An analysis by the Mayo Clinic found that such calculations do not always result in the accurate pricing of a drug.

According to the paper, which focused on cancer drugs, "[o]ne drug may prolong life by years and another by days, yet both carry similar price tags. Before paying for a drug, insurance companies, hospitals, government programs excepting Medicare and other payers negotiate with pharmaceutical companies for a lower price:. Pharmaceutical companies also often provide rebates after the purchase and have programs to provide medications at a discount or for free to those who can't afford them.

Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through Prescription drugs had represented a shrinking share of total health spending through , but increased in and with the introduction of some high cost specialty drugs.

In , drug spending did not grow as much as spending on other services, however, CMS projects drug spending as a portion of overall health spending will remain consistent over time. On a per capita basis, inflation-adjusted retail prescription drug spending in the U. While per capita out-of-pocket spending on prescription drugs is expected to grow in coming years, it has fallen as a share of total drug spending and this trend is projected to continue into future years.

Medicare is expected to represent a growing share of drug spending over the next decade. According to an analysis by IQVIA formerly the IMS Institute for Healthcare Informatics net spending on drugs in was driven largely by the introduction of new brands and price increases for existing drugs still under patent protection.

Compared to the previous years, the price of generics had a downward effect on overall drug spending. The report finds that the effect of patent expiries has been largely unchanged over the past four years.

Several analyses identify specialty drugs as a primary driver of drug spending in and Specialty drugs are used for the treatment of complex, chronic, or rare conditions such as cancers and hepatitis C.

In this cross-sectional study, we found that increases in drug wholesale list prices are associated with increases in net patient out-of-pocket costs and insurer payments. This could have both important clinical implications for patient outcomes and an impact on total health care expenditures. Published: December 9, Corresponding Author: Eric J. Author Contributions: Drs Yang and Dudley had full access to all of the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.

Critical revision of the manuscript for important intellectual content: All authors. Conflict of Interest Disclosures: Dr Resneck reported serving as an American Medical Association AMA trustee and as a paid expert witness for the US Department of Justice on cases related to fraudulent prescribing of compounded medications outside the submitted work.

No other disclosures were reported. Disclaimer: The opinions expressed in this article are those of the authors and do not necessarily represent the views of the AMA. Our website uses cookies to enhance your experience. By continuing to use our site, or clicking "Continue," you are agreeing to our Cookie Policy Continue. Download PDF Comment. Figure 1. View Large Download. Figure 2. Table 1. Table 2. Characteristics of the Patient Population in the Sample eFigure 1.

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