I'm on no drugs, but some in family are. From 2006 to 2007, the price drop on drugs was 2.5% and I expect something similar in 2008.
However, people are being put on more drugs and more expensive drug types because newer treatments are possible and new knowledge has gained, and this overall increases the expenses for drugs, but it's also added value and therefore it's not inflation.
But I guess that many people perceive that drugs get more expensive because their drug bill increases. But they're wrong. Drug prices are falling at the same time as bills are increasing.
Again, we're back to how inflation is measured. If you look at your drug expenses or computer expenses, in total, you get the wrong picture. A VW Passat of year 2000 is different from a VW Passat of year 1998. It looks the same, it feels the same, but the newer model is more safe. Should you consider this to be the same product? Most inflation models actually do, and the extra price for the 2000 model is considered to be inflation, even though it has more value. Harry Potter's last book caused a hike in the nationwide inflation figures in Norway, because the Harry Potter books are more expensive than 10-page children books.
Reality is, things are getting cheaper and cheaper, but usage efficiency of the things we buy is dropping, because we only have 24 hours per day. The cheapest IKEA shelf has dropped from 350 to 65 DKK during the last 15 years. Telephony went from 150 per month to 0 per month. Printers went from 1500 to practically 0. Toys dropped a lot, too. During the last 12 months mobile data went from DKK 10/MB to DKK 1.50/MB. Children's clothes went from expensive and bad quality to cheap and really good quality. Many building materials have dropped a lot, too - our office is in a huge area made using Chinese granite. There are zillions of examples of huge price drops - even cars get cheaper, when you compare cars from 1990s with today's cars that have same specs. |
