Prescription Drug Prices Dip Slightly in the U.S., the First Time in 45 Years
Prescription drug prices dropped 1% last year, the first time such a drop has occurred in the United States in 45 years. The drop was driven primarily by a greater reliance on generic drugs and much slower increases in branded drugs, according to a government study.
The pricing study was conducted by the U.S. Centers for Medicare and Medicare Services. It showed the decline in retail prices in prescription drugs, a feat that has not been seen since 1973 when prices dropped .2%, The New York Times reported. Despite the 1% decrease in retail prices, total expenditures on prescription drugs rose 2.5% to $355 billion in 2018, the Washington Post added. In all, health spending climbed to $3.6 trillion in 2018, an increase of 4.6%. That spending accounts for nearly 18% of the U.S. economy, the CMS report showed. In its analysis, a breakdown of those healthcare expenses amounts to $11,172 per each person in the United States, the Post noted.
In its analysis, the Times said spending on prescription drugs at pharmacies (not including the costs of medications dispensed in hospitals) accounted for 9% of that $3.6 trillion in health spending.
The CMS report was released as lawmakers on Capitol Hill and the White House have been developing different approaches to curb the price of prescription drugs in the United States. The bulk of the legislation pending in the House and Senate, is aimed at drugs covered by government-funded programs such as Medicare. Meanwhile, the CMS report notes that more people are going without insurance. The report said there were about 1 million more additional people without health insurance in the United States in 2018, about the same increase as in 2017, the Times reported. The cost per person for private health insurance rose last year by an average of 6.7 percent, the most rapid increase since 2004, the Post added.
House Speaker Nancy Pelosi plans to move forward with her drug pricing plan for Medicare next week. The Speaker’s proposal would tie prices that Medicare pays to an international pricing index and would also penalize drugmakers for not participating in the program. Pelosi’s plan would also allow private insurers to participate in the Medicare pricing structure. It is expected that a floor vote could come as early as next week on the Speaker’s plan.
As could be expected, the pharmaceutical industry and the White House have come out in opposition to the House-led plan. A new report from STAT News also shows that more than 100 chief executive officers of emerging biotech companies are also opposed to the Speaker’s plan. The White House and the pharmaceutical industry have warned of dire consequences for the industry if this legislation is passed. Both have suggested that the Speaker’s plan would stifle innovation and cause an overall loss of new drugs being developed by companies due to the lack of available funding for R&D that results from profits off of drug sales. Instead, the White House, which at one time supported tying the prices for Medicare drugs to an international pricing index through a “favored nations clause,” is now backing a more bipartisan plan in the U.S. Senate that calls for drug companies to pay rebates to Medicare if they raise prices higher than the inflation rate.