Pharmaceutical research firm IMS Health began tracking drug sales in 1957, and in 2012, for the first time, they recorded a drop in spending on prescription drugs. This drop is largely due to the widespread use of generics. However, some individuals are warning that this increased use of generics is taking attention away from the increasing costs for complex specialty medicines used to treat cancer, rheumatoid arthritis and other diseases, and thus prices for drugs will resume their long-term pattern of increases in the coming years only this time the increases will be mind-boggling.
In the past few years, there has been unprecedented growth in generic drugs because many widely used brand name products, including Lipitor (anti-cholesterol drug) and Plavix (prevents blood clots), have lost their patent protection. However, this situation will not continue 84 percent of all drugs dispensed in 2012 were generic, so the growth of generic sales has pretty much reached its maximum.
In light of these predictions, many insurers are now tightening their requirements for giving approval for high-priced drugs, or are requiring patients to first try older, less expensive therapy and have it fail before OK ing new, expensive alternatives. To which Dr. Alan Lotvin, the head of the specialty pharmacy at CVS Caremark, says, I think they see the pain coming, They know this dynamic is going to happen and they re very concerned about it, and I think they re looking for solutions.
ACSH s Dr. Josh Bloom says that these savings are deceiving: We are seeing a temporary period where the very rapid increase in the market share of generic drugs has resulted in some savings. He adds, But this is really an artifact of the simultaneous expiration of multiple patents of brand drugs, and a subsequent shift to generic equivalents within a short time frame. When you take a look at what new drugs cost, you d better be sitting down. There were 39 new drugs approved in 2012. Eleven are for cancer, and their average cost is over $100,000 per year. There are also a number of orphan drugs those for rare conditions, which can cost five-times that. People who used to complain about paying $200 per month for Lipitor will look back fondly upon those days.