First, following the money (hey, it’s me, the health economist), AARP brings out its latest Watchdog Report which details the rising prices of 220 brand name Rx’s most used by older people covered by Medicare Part D since the plan’s inception two years ago. These prices have risen much faster than the rate of general inflation. The average price increase in 2007 was 7.4%, over 250% of inflation in the period (=2.9%).
For people with multiple chronic conditions, this translates into Real Money. AARP calculates that for someone on three medications for chronic disease management, the average increase in the cost of therapy since 2002 was $1,600.
Kaiser Family Foundation‘s latest report, The Public on Prescription Drugs and Pharmaceutical Companies, looks into direct-to-consumer (DTC) advertising trends which were covered in a large cover story in USA Today on March 4. It’s great to see coverage of this important issue in a mainstream mass media publication so people can learn about their behavior vis-a-vis TV ads. KFF continues to monitor DTC promotion through this project, the third poll that KFF has done with USA Today and the Harvard School of Public Health. The survey was done in January 2008. The key points of the study are:
2. People say they are having a difficult time paying for drugs. 54% of Americans take prescription drugs: 50% of them daily, and 19% of them take 4 or more drugs.
3. Americans are split concerning who should be primarily responsible for develop prescription drugs: pharmaceutical companies, government and academic organizations share the role.
The high cost of drugs burdens consumers, and those who sponsor drug plans. PharmedOut.org specializes in “counter-detailing” — that’s the business of un-selling branded pharmaceutical products, and promoting generics. Early enthusiastic adopters of the un-detail are State governors. Why? Governors must balance budgets and still provide services to their constituents. Health care is the #1 or #2 line item for state spending. Thus, governors are keen to get control over spiralling prescription drug costs within that line item. My own state governor, Ed Rendell, has been a big adherent of this practice for the past two years. He has 10 trained “unsales reps” on the staff. It’s all about efficacy and safety, they say. Oh, yes, and money.
Health Populi’s Hot Points: The fact that the most-prescribed drugs for seniors increased in price by 2.5x greater than inflation seems to be a real snafu by pharma companies. Could they feel less loved than they do now? On the other hand, margins are tighter than ever given the shallow pipelines for new-new drugs, so the companies are looking out for shareholder interests. Anothe tactic is that we see many of the largest pharmas shedding staff. My personal anecdote is that several people whom I consider some of the brightest lights in Big Pharma have left their positions for posts outside of traditional pharma: in biotech, new media, and consumer goods. A brain drain, coupled with lack of aggressive re-imagination of the pharma business, could further exacerbate the industry’s turnaround.