el paradisio: WSJ6/27:Drug spending soared 17.4% in 1999!!
( I bet you it'll be much higher in 2000, 2001, 2002,....
-gg-
TA
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June 27, 2000
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Express Scripts Found Spending
On Prescription Drugs Rose 17.4%
By RACHEL ZIMMERMAN
Staff Reporter of THE WALL STREET JOURNAL
interactive.wsj.com@2.cgi?l/text/wsjie/data/SB962066146568362750.djm/&NVP=&template=atlas-srch-searchrecent-nf.tmpl&form=atlas-srch-searchrecent-nf.html&from-and=AND&to-and=AND&sort=Article-Doc-Date+desc&qand=&bool_query=drugs&dbname=wsjie%26named%3Ddbname%26period%3D%3A27&location=MAIN-HED&HI=
Spending on prescription drugs in the U.S. rose a record 17.4% last year, with seniors over age 70 hardest hit by rising drug prices, according to a new analysis by a big pharmacy-benefit manager.
The study, expected to be released Tuesday by Express Scripts Inc., found that rising prescription-drug prices were a major factor contributing to the increase in total spending on drugs. Greater overall use of prescription drugs and, to a lesser extent, the popularity of expensive new drugs also contributed to the spike.
The findings will no doubt add fuel to the current fight in Congress over the soaring cost of prescription drugs, which is considered one of the more potent policy debates leading up to the November elections. Nearly a dozen proposals from both Democrats and Republicans are advocating that prescription drugs be covered by Medicare, the federal health program for 39 million elderly and disabled Americans. Medicare covers drugs used in hospitals but generally doesn't cover outpatient prescription drugs, except for a limited number of pharmaceuticals, mostly ones administered by physicians. Today, drug benefits are among the most widely used features of private health plans.
Now, with the pharmaceutical industry under pressure to lower costs, lawmakers are scrambling for a fix. Over the weekend, President Clinton released a new, more generous version of the administration's drug-benefit plan. The House may vote this week on a Republican-backed drug-benefit plan that would have private insurers provide a voluntary prescription-drug plan to Medicare beneficiaries, with some government backing. In the Senate, Democrats are pushing their own drug-benefit package.
"This new report will give us fresh ammunition," said Sen. Ron Wyden, an Oregon Democrat and a sponsor of one of the prescription-drug-coverage bills. "This is wholly consistent with what we've seen in recent months: The folks who need medicine the most very often have the least bargaining power."
The 17.4% increase in prescription-drug spending is the highest annual rise since Express Scripts began tracking such data in 1993. Overall, the average cost of a prescription rose 9.6 % in 1999, with spending on prescription drugs at $387.09 a person, up from $329.83 in the previous year.
For the elderly, the increase was sharper: The average cost of a prescription rose 14% among seniors ages 70 to 79 and 16.4% for those 80 and older.
"That one finding is fairly remarkable" because it spotlights the pure increase in drug prices, regardless of usage levels, said Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota.
For instance, the price of two popular hormone-replacement drugs -- Premarin and Prempro, both made by American Home Products Corp. -- rose 12.1% in 1999, according to the study. The price of Glucophage for diabetes, from Bristol-Myers Squibb Co., increased 14.5%, while Serevent, an antiasthmatic from Glaxo Wellcome PLC, rose 14.6%.
Express Scripts researchers identified the top 10 categories of drugs used by seniors, largely drugs used to treat chronic conditions such as heart disease, respiratory illness, diabetes and gastrointestinal disorders. Among these top 10 therapies, researchers found that the annual cost of a prescription was more than $400 in six of the 10 categories and above $500 in five of the top 10. That's significant, said Barrett Toan, Express Scripts' chief executive officer, because it suggests that beneficiaries enrolled in a standard Medicare + Choice program with capped benefits of $500 or less could potentially reach or exceed their cap with a single drug. Mr. Toan said, on average, seniors used 29 different prescriptions in 1998.
"This highlights the significance of the cost of drugs to the elderly," says Emily Cox, an Express Scripts research manager. "These are chronic therapies. These are not antihistamine s, this is not Viagra, these are not trivial therapies."
The cost of new drugs played "a small but significant," role in increased spending last year, particularly by the elderly who gravitate toward innovative, more-effective medications, Mr. Toan noted. This was largely due to the introduction of two blockbuster painkillers, Pharmacia Corp.'s Celebrex and Merck & Co.'s Vioxx.
A Merck spokeswoman said it's fairly obvious that when a new, effective drug is unveiled, physicians will flock to it and consumers will pay for it, especially older ones who are more desperate for treatments and cures. Moreover, elderly patients take four times as many drugs as younger people, typically at higher strengths, according to the new study. "If you have a new drug that meets a need in the marketplace, it will be quickly adopted for appropriate patients," the Merck spokeswoman said. Vioxx was introduced in May 1999, with first-quarter sales of $305 million in the U.S.
Aggressive direct-to-consumer advertising played a big role in the overall spending increase, with widely advertised antihistamines Claritin, Allegra and Zyrtec showing the largest percentage increase in use, the study said. Drug companies have come under fire for their fat advertising budgets: in 1999 the pharmaceutical industry spent $1.1 billion on television ads, a 70% rise over the previous year, according to market research group IMS Health.
Looking to the future, Express Scripts, of Maryland Heights, Mo., projects nearly a doubling of spending over the next five years, to $758.81 per member in 2004. For the current study, Express Scripts surveyed 9.6 million of its 38 million members. But with more intense political pressure and fewer blockbuster drugs in the pipeline, researchers say they expect a slowdown in the annual cost of growth, beginning in 2001 with a projected growth rate of 16.5%.
That couldn't happen soon enough, according to Prof. Schondelmeyer. "Corporations are going to wake up and begin to say 'We're not going to cover all of this,' " he said. "Employers will begin to frame this as a question of sustainability and payers won't be able to sustain this in the long run."
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Message #55462 from Tunica Albuginea at Jun 27, 2000 1:28 PM ET
*OT* el paradisio, I will take up your " why are drugs expensive? " question :
What I do not understand,
1. Prescription drugs are going up, rising medicare cost is saying us,that the population is more sick...
but the leading pharmaceutical companies,like MRK,PFE,BMY,SGP....are growing slow and the stock prices are almost the same as one year ago.
2. All that pharma companies reports higher international sales.
3.Pharma companies have better research, more expensive drugs for sale, almost... every 2 weeks a new expensive drug is approved by FDA.
What is going on here???
Maybe, PLACEBO "prescriptions" and doctors abusing the system?
I get it to mean you don't know why drug prices are going up? Are you ready?
<vbg>
Because:
-older population is being kept " healthier " by extraordinary
interventions on cardiocascular system( coronary baloons
+ stents ) which require expensive meds to keep it open.
-treatment of heart failure , the result of when the above
fails
-Lawsuits ( need longer testing; payout to frivolous
claims; look at silicon implants ).
-indiscriminate use of antibiotics for colds; uneccessary
but neither patients nor family docs have the cahones to
stop it.
-That has given rise to widespread antibiotic resistance
requiring the use of stronger 4 th generation
cephalosporins and Vancomycin.
-use of drugs to keep older and older bodies going even though
they do not help.However patients demand it and Docs are too
impotent/busy to say no.
-Corollary to above, Docs don't want to become economic cops
for health industry, government etc
Most docs feel this is a decision our Society must make.
-International sales have lower profit margins.
-New drugs are more expensive because Pharma needs to
recoup costs rapidly before another Pharma discovers a
better pill.
-Docs are forced into abusing psychotropic drugs because
HMOs will not pay for the better treatment:
psychoanalysis. So docs just dope your pain and anxiety.
5 minutes and you are out the door.
Pharma has deemed a 3 year shelf life for drugs. Recent studies
by the US ARMY and VA Hosp. indicates instead that
shelf life maybe as long as 10-15 years for most drugs.
Pharma certainly does not waant to let this cat out
of the bag, because...........remember...........
Pharma is not The Social Service Dept: They
are for profit companies.
-The 10 year Bull Market has created a lot of wealth.
People thus have been eating high on the hog.
Obesity is at record proportions in the US ( 60% of
Americans are obese ).
That jacks up your cholesterol and causes diabetes and
high blood pressure. You need drugs to take are of that.
Thus everybody's drug kitty has gotten fatter and more
expensive.
These are s o m e <vbg> of the reasons el p.
I am sure that if I think about it a little bit,
( instead of giving you my top of the head thoughts ,<bg> )
I can find more.
One last note:
To pay for your fatter, more expensive drug kitty,
chances are you will need a wage increase.
Mention that to Greenie, next time you see him. I think
he ought to know about that development,
cheers
TA
Message #55417 from el paradisio at Jun 26, 2000 11:33 PM ET
Tunica, I think I'm missing something in this health care discussion.
1. I agree,we have more diagnostic tools now,than we had even 1-2 years ago.Patients are tested,tested,tested until they die or refuse unnecessary medical procedures.
2. Population is healthier than before, but baby boomers are getting older and expenses are growing.
What I do not understand,
1. Prescription drugs are going up, rising medicare cost is saying us,that the population is more sick...
but the leading pharmaceutical companies,like MRK,PFE,BMY,SGP....are growing slow and the stock prices are almost the same as one year ago.
2. All that pharma companies reports higher international sales.
3.Pharma companies have better research, more expensive drugs for sale, almost... every 2 weeks a new expensive drug is approved by FDA.
What is going on here???
Maybe, PLACEBO "prescriptions" and doctors abusing the system?
el
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