Why are drugs so expensive?
A lot of people today wonder why prescription drugs are getting so
expensive. Here are answers to common questions about prescription drugs and how
their prices and usage affect the cost of health care. The answers may help you
understand how you can get your best prescription value.
Why are drugs so expensive?
A number of factors affect the prices of prescription drugs:
In 2000, drug companies are expected to spend about $26.4 billion on
research alone--up 10% from 1999--according to the PhRMA 2000 Industry profile.
Advertising of prescription drugs to consumers is booming. In 1999,
manufacturers spent about $1.8 billion to advertise more than 100 drugs--up from
$100 million to sell 10 drugs in 1990--says Tom Tomezyk of William Mercer, Inc.
Demand is pushing up health-care costs--according to IMS Health's Plymouth
Group, an estimated 40% of the increase in drug costs is due to increased usage.
In 2000, more than one in eight Americans will be 65 or older, and that segment
is growing. People 65 and older take about 10 prescriptions per year compared to
2.4 for adults aged 25 to 44.
Prescription drugs have gone from being 4.8% of our health-care costs in
1980 to 8.2% in 1999.
How can drug costs be controlled?
Ask your doctor to prescribe generic drugs whenever possible. Generics must
pass the same FDA reviews and contain the same active ingredients in the same
doses as more expensive brand-name drugs. Generics can help you save money.
Choose a health plan with a multi-tiered drug benefit. You may pay a lower
copay (or fixed fee) for generic drugs than a brand-name drug.
Ask if prescribed brand-name drugs are on the drug formulary. A formulary is
the insurance company's list of brand-name drugs approved for a lower copay.
Some drug plans have a three-tier drug benefit and a drug formulary. Generics
have the lowest copay, the copay for brand-name drugs not on the formulary is
the highest. A formulary should be provided at enrollment.
For more information, contact your agent.
Information provided by American Medical Security, Inc., which markets
products underwritten by United Wisconsin Life Insurance Company.
