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Drug Prices

By May 10, 2019Commentary

What would a week be without an opportunity to bash drug companies.  This week’s opportunity comes courtesy of pharmacy firm GoodRx, which issues a report summarizing price changes in the last year.   (GoodRx Report)   In the first quarter of 2019, the average price for generic and brand drugs increased by 2.9%.  Partly this is a calendar year effect; many companies raise prices at the start of the year.  The spike is about the same as last year and the last few years have seen a common pattern of increases at the start of the year and a plateau or even slight decline over the remainder of the year.  Over 500 brand medications reported a price rise in the quarter.  Just to show what jackasses the large drug companies are, several of them pledged to keep brand price rises under 10% (which in itself is inexcusably high) and sure enough, a bunch of popular medications have 9%, 9.55% and my favorite, 9.9%, increases.  Hey, it wasn’t 10%.  The 20 most expensive drugs each had monthly costs over $25,000.  On the other hand the ten most prescribed drugs are all generics with monthly costs of less than $30.  There is geographic price variation; prices in New York, San Francisco, and Los Angeles were as much as 17% over the national average.  On the other end of the scale, Atlanta, Denver, Dallas, Houston and Tampa had prices over 10% less than the national average.  The report gives a fair amount of detail on the use of the most common drugs.  Depression and anxiety drugs are experiencing rapid increases in use, probably because of the number of ads people see or hear for their use and partly because of our overhyped political atmosphere and social media probably is also a contributor.  The middle northern and northeast states have the highest rate of growth, probably because of our god-awful winters.

There maybe has been some slowdown in price growth; all the public talk may have been an inhibiting factor.  What is really needed, and what Congress or CMS should mandate, is cost information disclosure.  We are not dealing with a free market in regard to patented products.  We need to see cost data to understand if the price bears any reasonable relationship to cost.  I know the answer; it is no, but let’s see the data.  In the meantime, for many widely used brand medications, the rate of price increase exceeds general inflation or personal income growth, which means further burdening of an already financially stressed population.

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