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Study Links New Drugs to Higher Prices
When it comes to prescription drugs, newer may be better but also more expensive.
A research team at the School of Pharmacy has found that while newer drugs comprise 45 percent of those most frequently prescribed, they are responsible for 75 percent of overall drug spending increases.
The study, sponsored by the Health Insurance Association of America and the Blue Cross/Blue Shield Association and just published in the journal Health Affairs (Vol. 20 No. 5, September- October 2001), examined the impact of new drugs on the market. The study focused on the relationship between health care spending increases and the appearance of new and more expensive drugs. Researchers identified two factors by which newly approved drugs have great impact on increases in drug spending: product shift and changing utilization patterns.
"Product shift and changes in utilization greatly affect what Americans pay for medications," says study co-author C. Daniel Mullins, PhD, associate professor at the School of Pharmacy. "Product shift occurs when new drugs replace older drugs and the newer drugs are more expensive. Also, newer drugs are often utilized more."
Previous reports from the Health Care Financing Administration, now called the Centers for Medicare and Medicaid Services, documented that prescription drugs are the fastest rising component of health care costs, yet there has been uncertainty about the impact of newly introduced drugs. The Maryland study, however, firmly documents that new drugs have a significant impact on rising health care costs, with product shift and changes in utilization patterns being major contributors. Researchers concluded that new drugs in the "pipeline" could boost national drug spending to $216 billion by 2004.
Their study also noted that drug spending growth rates from 1995 to 1999 were more than twice the growth rate of overall health care spending. Estimating the impact of pipeline drugs and those newly released needs to be taken into account, they concluded, if health care systems want to track drug cost trends and prepare for the future.
"Consideration of pipeline drugs is imperative for understanding and projecting future drug trends," says co-author Francis B. Palumbo, PhD, JD, professor in the School of Pharmacy and director of The Center on Drugs and Public Policy. "Innovative drugs in the pipeline will assist previously untreated patients. However, how we will pay for new, more expensive treatments is one of the most important questions we face."
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