A Bogus Solution for High Drug Costs
Most of the drugs Americans take are lower cost generics — accounting for about 88 percent of prescriptions. Generics are cheap because they are no longer protected by patents and different manufacturers compete on price. Yet, drugs whose patents have not yet expired can sometimes be very expensive; especially those recently approved and those derived from living substances. As a result, national spending on drug therapies increased by nearly one-quarter (23 percent) in the past two years. Much of that increase is on expensive brand-name drugs and high-tech, specialty drugs — such as those used to treat cancer, hepatitis, rheumatoid arthritis and multiple sclerosis. In most cases, drug therapy is a great value. However, some drugs are expensive because they are new; others because they are breakthrough therapies. Currently much of the benefit from manufacturers’ rebates are passed on to employers, workers and consumers in the form of lower retail prices or lower premiums. Passing poorly thought-out regulations on drug plans will not lower what Americans pay for drugs, but could increase them by reducing the ways drug plan managers are allowed to compete for the business of managing health plans’ drug costs.