Skip to main content

Prescription Drugs in the US

As we enter the new PPACA era I was thinking of all the ways the law does not address the actual cost of health care. I was also thinking about areas where we could have significant impacts on the costs of care without massive system overhauls. There are actually many and I will explore those over the coming days and weeks. Today, I thought we should look at Prescription Drugs.

In 2010 we spent nearly $260 Billion on Prescription drugs in the US (about 10% of our health care spend). While the growth rate for prescription drugs has slowed in the last 5 years we still see huge increase from 1999 to 2011 - 43%. We went from about 2.8 billion scripts in 1999 to over 4 billion in 2011. The US population only grew 9% during that same period, showing that we are clearly treating more with drug therapy than ever before.

The slowing of the annual growth rate to about 4.3% is a reflection of slower growth in utilization of drugs (part of the recession), increased use of generics at a lower cost, the loss of important drug patents for key brand-name drugs (Lipitor and Plavix), increasing Medicaid prescription drug rebates and a small decrease in the number of new drugs approved. However, in a recent 2012 study by Keehan SP et al, they expect the growth rate to explode again in 2014 with the enrollment expansion in PPACA. They are predicting growth rates of nearly 9%. Add to this that several new drugs are now in the pipeline and many will get 20 year patents. So we will see escalation in drug spending in the US starting next year.

So what can we do? Well I think one simple way to decrease this spend is to demand that drug companies give the US pricing equity. What this means is that they can't charge us anymore for a prescription drug than the lowest price they sell it for somewhere else in the world. (excluding direct aid situations). This simple act would represent a huge price drop for us and while the drug companies would have to find alternatives (probably increase world prices) we are not telling them how to run their businesses, legislating price controls, tampering with their R&D expenditures or marketing costs. Some studies estimate that the savings could be as high as 10-15% of our national spend annually. By the way most countries with national health plans demand this of their drug suppliers.

The other way we might decrease costs is to ban all prescription drug advertising as this is becoming a national health risk and would be good public policy. The US and New Zealand are the only two countries that allow Direct to Consumer Pharmaceutical Advertising that includes product claims. Most countries don't allow any pharma advertising at all and they report no significant change in treatment protocols or compliance. Canada allows ads that mention either the product or the indication, but not both. So why don't we learn from the rest of the world.

For example, in 1980, total spending on DTCPA was $12 million; in 1990, it was $47 million; and in 1995, it was $340 million, representing a nearly 3,000% increase in expenditures during a 15-year period before broadcast ad regulations were relaxed. Spending on DTCPA nearly quadrupled again during the following decade, topping $5 billion in 2006 and 2007, before dropping to $4.5 billion in 2009. The average American television viewer watches as many as nine drug ads a day, totaling 16 hours per year, which far exceeds the amount of time the average individual spends with a primary care physician.

Then there are the issues with the actual ads themselves. While the FDA has durastriction over the claims made in the ads they don't have the necessary enforcement staff. In 2008, only 35% of broadcast DTCPA materials had been reviewed as a result of staff shortages.

As we all know many of the ads are very biased and don't really tell the consumer the true story. Studies show that any ad requiring more than a typical 8th grade education is lost on the average US consumer. Nearly all pharma ads are testing way above an 8th grade level. So when the ads are presented and are not factual most consumers can't ascertain the flaw and believe the ad as presented. For example, in one study, 82% of DTCPA ads made some factual claims and rational arguments for use of the advertised drug; however, only 26% of the ads described risk factors or causes of the condition, and only 25% mentioned prevalence. Because DTCPA rarely focuses on public health messages about diet, exercise, addictions, social issues, and other treatments, it can also cause people to falsely believe that they are well informed, reducing their motivation to search for more reliable information. One survey of consumers found that 50% of respondents thought that the ads were approved by the government, 43% thought that a medication had to be completely safe for it to be advertised; and 22% thought that a drug known to have serious side effects could not be advertised. None of the above is true.

Finally, there is the problem of folks asking for or demanding the drugs they see advertised. Sadly most believe the visuals they see in the ads which are rarely indicative of reality. Consumers with false expectations then present a treatment nightmare for doctors. Physicians report that most patients who initiate a request for a new drug understand the benefits much better than they understand its risks. Information about risks is also typically presented in often-ignored smaller print or as part of a large, undifferentiated block of text or audio. In addition, ads often show a mismatch between visual imagery and verbal messages when risk information is presented. Qualifying language with respect to side effects may therefore be misleading and open to multiple interpretations because of the use of words such as “mild,” “usually,” “short time,” “if,” and “may.

DTCPA has been criticized as contributing to the “medicalization” of natural conditions, cosmetic issues, or trivial ailments, resulting in an over medicated society. For this reason, some commentators have even referred to DTCPA as a threat to public health.

Based on all this if we were to ban such ads and demand equity in pricing we could decrease drug cost significantly and begin to solve our health care crisis. Just some food for thought.




Popular posts from this blog

Porsche Perspective

Before I start I must declare that I am a Ferrari owner, racer and lover. As such Porsche is normally an arch enemy. Most of the faithful from each camp very rarely see eye to eye and often avoid each other like the plague. So for me to write this piece on Porsche is a stretch and proves once and for all, above all I am just a true lover of all cars! Porsche has to be respected for their longevity, their racing prowess and their myopic market focus. Porsche's have been racing and winning for as long as I can remember and while they are not a Ferrari their racing pedigree is remarkable. Initially their claim to fame was the basic 911. This is still their bread and butter car and over the decades has been improved markedly. But I am not going to focus on the 911, the Panamera or Cayenne. Today I want to discuss the smaller, younger cousins - the Cayman and the Boxster. These two "entry level" Porsches are worth writing about. Porsche first made the Boxster in 1997 in an...

Tax Returns & the Truth

We are being bombarded with stories about the Mitt Romney tax returns. The left thinks he is hiding something and wants him to disclose 10 years of returns (recently amended to 5 years) so they can dig into them and find ways to make his wealth an issue in this election. While it appears all is fair game in politics I think the American people would prefer to hear about who is going to fix the economy and get jobs back on track. That said all the debate about tax returns made me start thinking and now I have some questions. Mitt Romney paid over 13% in taxes in his 2010 return and claims that is the case for all years. His 2011 return will be out in September and we will see what that year yielded. Barrack Obama paid 20% in his latest tax filing according to public records. All this got me thinking. I made less money than both of them in 2011 and I paid about 44% in taxes. Is there a problem here? How can they both pay so little on large sums of income and I, a poor working ...

Energy Policy in America

Energy Policy in America Well it appears that we are at another critical crossroad with economic policy in America. Our President has decided that moving America to alternate green fuels is worth the potential economic downturn that could result from this short term strategy. America definitely needs to diversify its energy use. No one on either side of the aisle would argue that point, however, the process and timing of such a diversification are critical to our economic recovery. We must do 2 things over the next decade with our energy policy if we are to maintain a position as the leading economy in the world. One we must become less dependent on foreign resources and two we must diversify our energy use. It seems apparent that we have tremendous oil and coal resources in our country that we are not utilizing. I feel this is a starting point. How much energy utilization can we switch from foreign oil to our own resources over what period of time? At the same time what...