Saturday, September 17, 2005

Costs of Currently Marketed Drugs Rise Faster Than Inflation

We recently posted on the rising prices of new drugs, but drugs already on the market also seem to rise at rates that are hard to explain. The Kansas City Star released data from a Government Accountability Office (GAO) report on inflation in the prices of currently marketed drugs from 2000-2004. Overall, the average price of the 96 most drugs most commonly used by older adults rose 25.4% over those years, while the US inflation rate was 9.7% (see inflation rate calculator here). Of these 96, the drugs with the largest increases were Lipitor (made by Pfizer), then Celebrex (Pfizer), Plavix (Sanofi-Aventis and Bristol-Myers Squibb), Prevacid (Abbott and Takeda), Ambien (Sanofi), Zocor (Merck), Levaquin (Johnson & Johnson), generic hydrocodone/acetaminophen, Flonase (GlaxoSmithKline), and Zithromax (Pfizer).
Since all development and most research and regulatory costs are expended prior to the time a drug is first marketed, and given all the current interest in controlling health care costs, why these drugs' prices should go up faster than inflation is a mystery.

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