Report: Brand-name drug prices rise sharply

  • Article by: KATIE THOMAS , New York Times
  • Updated: November 28, 2012 - 10:58 PM

The gap between brand-name drugs and generics is growing wider.

 

The price of brand-name prescription medicines is rising far faster than the inflation rate, while the price of generic drugs has plummeted, creating the largest gap so far between the two, according to a report published Wednesday by the pharmacy benefits manager Express Scripts.

The report tracked an index of commonly used drugs and found that the price of brand-name medicines increased more than 13 percent from September 2011 to this September, which it said was more than six times the overall price inflation of consumer goods. Generic drug prices dipped by nearly 22 percent.

The drop in the price of generics "represents low-hanging fruit for the country to save money on health care," said Dr. Steve Miller, the chief medical officer of Express Scripts, which manages the drug benefits for employers and insurers and also runs a mail-order pharmacy.

The report was based on a random sample of 6 million Express Scripts members with prescription drug coverage.

The Pharmaceutical Research and Manufacturers of America, the trade group representing brand-name manufacturers, said the report was skewed by a handful of high-priced specialty drugs that are used by a small number of patients and overlooked the crucial role of major drugmakers.

"Without the development of new medicines by innovator companies, there would be neither the new treatments essential to progress against diseases nor generic copies," Josephine Martin, executive vice president of the group, said in a statement.

The report cited the growth of specialty drugs, which treat diseases like cancer and multiple sclerosis, as a major reason for the increase in spending on branded drugs. Spending on specialty medicines increased nearly 23 percent during the first three quarters of 2012, compared with the same period in 2011. All but one of the new medicines approved in the third quarter of this year were specialty drugs, the report found, and many of them were approved to treat advanced cancers only when other drugs had failed.

Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said the potential benefits of many new drugs did not always match the lofty price tags.

"Increasingly it's going to be difficult for drug-benefit programs to make decisions about coverage and payment and which drugs to include," said Schondelmeyer, who conducts a similar price report for AARP.

He also helps manage the drug benefit program for the University of Minnesota.

"We're going to be faced with the issue that any drug at any price will not be sustainable," Schondelmeyer said.

Spending on traditional medicines -- which treat common ailments like high cholesterol and blood pressure -- actually declined by 0.6 percent during the period, the report found.

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