Don’t Blame Drugs For Cost Issues

By July 10, 2009Commentary

IMS Health collects and publishes a lot of information on drug utilization and sales.  (website)  In its most recent projections for global drug sales in 2009, the company estimates modest growth of 2.5-3.5% for  total revenue of around $750 billion.  In the United States, the forecast is for an actual reduction in sales of about 1-2 percent and over a five-year period, sales growth will essentially be nonexistent and revenue will stay flat.  For several years now drug costs in the United States have grown at a rate well below that of overall health costs.  This is driven by greater use of generics and by good management of utilization and pricing by PBMs and health plans. 

Drug companies have taken a lot of abuse over the years for their profits and pricing practices, but clearly drugs are not currently the cause for the overall cost issues in the United States’ health system.  If hospital and physician costs had been controlled at the same rate as drug costs, we would have a much different perception of our current “crisis”.  There are still issues with drug pricing and utilization, particularly in regard to specialty biotech drugs, but the limiting of total drug spending over the last few years can be viewed as a real success story.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply