$$ and sense
The cost of prescription drugs
Considering the cost of quality food, water, shelter, and air, staying alive and well is an expensive proposition. And then there’s the price of medical care, counseling, and luxuries such as yoga, massage, vacations, and other things designed to enhance health and well-being. In fact, the only thing likely to be more expensive than staying well is getting well.
The prices of prescription medications, over-the-counter remedies, and other medical supplies continue to rise like mercury, with no indication the feverish trend will end any time soon. Yet, like folks lining up at the gas station, we continue to pay the price. What choice do we have?
Community Hospital recently treated a child brought to the hospital with a life-threatening case of botulism poisoning. Tests revealed that a traditional course of care would take 10 days. The child didn’t have 10 days.
The alternative was a single dose of medication that could save the child’s life and limit a stay in the Intensive Care Unit. Which sounds simple enough until you realize that a single dose of this drug cost $45,000. But how can you place a value on a child’s life?
The question was not whether to administer the drug, but how — how to pay for it, and how to justify not its purpose but its price.
“The state of California determines the cost of this drug,” says Mariann Novarina, pharmacist and director of Pharmacy for Community Hospital. “It’s a matter of weighing not only the benefits of the drug but also its economic value. In a separate case, elsewhere, a baby was not given the drug and spent 10 weeks in the hospital at a cost of $480,000. Any time a drug can reduce or eliminate time spent in the hospital, particularly in the ICU, any time it can eliminate the need for additional drugs and procedures, we can justify its value. Although it may be expensive, it is cheaper than the alternatives.”
The cost of manufacturing drugs, says Novarina, is black and white. It’s the other issues, the research and development and marketing costs, for example, that become variable in determining price.
“They may seem expensive,” Novarina says, “but if, for instance, you take your antihypertensives (used to treat high blood pressure) or if you follow your diabetes directions, this may keep you out of the hospital, where costs can add up more quickly.”
According to the Centers for Medicare and Medicaid Services, HealthCare Industry Market Update (2003), drug prices are influenced by three main factors: increased use, type of prescription, and increasing costs in general.
As the population becomes older and generally less healthy, as evidenced by the widespread rise in obesity for example, the increased incidence and prevalence of chronic disease prompts an increase in the use of medications. Further, as new definitions, treatment guidelines, and standards are established, additional diagnoses are made, and more patients require treatment, which also increases the use of medications (Pharmaceutical Industry Profile, 2003, PhRMA).
Not only are newer, more expensive drugs increasingly available, they are also more heavily and effectively marketed, both to the medical community and directly to the consumer. The effect is a generalized awareness and increased interest in these products, leading to higher prices.
In addition, new drugs are now available where no alternatives previously existed. For example, since the first drugs for Alzheimer’s became available in 1993, three more products have been introduced. (Pharmaceutical Industry Profile, 2003, PhRMA).
Finally, standard price increases are nothing new. Inflation is responsible for an estimated 2-percent to 2.5-percent increase in hospital drug costs. And, since new is assumed to be synonymous with improved, newly approved drugs are usually more expensive than older products. In 2000, for example, the average price per existing prescription was $37.20, whereas the more innovative versions ranged from $65.07 to $142. The simple answer is that innovation costs more.