Expensive Drugs Could Bankrupt Medicare!

Conceptual photo  illustrating expensive drugs and medicines

The United States spent about $98 billion on pharmaceuticals in 2006. This is despite 10% less drug use than other countries.  The problem is that our drugs, on the whole, cost about 50% more than other countries, 77% more for brand name medications.

Take the Lilly drug Cymbalta, for example – the average cost for a 1-month supply in the USA is $176, compared to $113 in Canada and $47 in France:

Think that’s expensive?  Sanofi will soon launch Lemtrada (alemtuzumab), an M.S. treatment that costs $60,000 per year. It will compete against Gilenya from Novartis, which is already on the market at $40,000 per year.

Why?  Some say that it’s because we’re wealthier and need to subsidize for the rest of the world. But even if we paid more based on our relative wealth, it would come to about a 30% premium, not the 77% we do pay. Some say that it’s because we in the US subsidize the massive research and development for drugs. But the entire bill for R&D for the pharmaceutical industry was less than $50 billion in 2006, far less than the “extra” we paid for drugs.  Some say it’s because we are subsidizing massive marketing in the US, which might be upwards of $40 billion in 2006. Again, far less than the “extra” amount.

Critics of pharmaceutical companies point out that only a small portion of the drug companies’ expenditures are used for research and development, with the majority of their money being spent in the areas of marketing and administration. The pharmaceutical industry has thousands of Washington lobbyists to protect their interests, and actually spent $855 million, more than any other industry, on lobbying activities from 1998 to 2006.

Prescription drug prices have become a real political issue in the United States.

Many third party payers can negotiate lower prices to control their low costs, but this causes pharmaceutical companies to raise their retail prices to offset costs.

Using a mail order pharmacy for a 3-month drug supply can save as much as a 29% in out-of-pocket costs and 18% in total prescription costs.

To save even more money, 10 million U.S. citizens bring in medications across land borders from Canada and Mexico each year.  Other patients shop on-line at lower cost overseas pharmacies, and an additional 2 million packages of medications arrive annually by international mail from Thailand, India, South Africa every year.