Brand Drug Prices Continue To Go Up

As Medco highlighted several weeks ago, brand prices are going up a lot faster than generic prices. That’s nothing new. But, Barclays Capital recently highlighted that brand prices are going up faster in 2010 than any prior year (based on First Databank data).

Why?

  • Are they trying to make up for their concessions around Part D pricing and closing the donut hole?
  • Are raw material prices up?
  • Is it harder to develop a blockbuster drug and therefore R&D costs are going up?
  • Is it because the brand market is so much smaller with generic fill rates up?
  • Is it because their drug is losing patent?
  • Is it because they’re chasing more orphan drugs?

I’m not sure, but it certainly is a point of concern for many plans although in the big picture it’s not a huge driver of cost…

  • Prescriptions represent 10-15% of total healthcare costs.
  • Brand drugs represent 20-30% of prescription claims (but probably 70-80% of prescription costs).
  • Even a 10% increase in prices across the board would only be about 1% increase in total healthcare costs.

2 Responses to “Brand Drug Prices Continue To Go Up”

  1. lol come on Geroge, you know this has nothing to do with cost-side. 🙂 Otherwise I think you’re spot on. I’d also add worsening economy.

    Only monpolistic entities like large pharmas and government can increase price to make up for projected revenue shortfall!

    • Of course I agree, but I do think there is some legitimacy to the arguement of drugs are expensive because of the research. That certainly doesn’t explained sustained price increases over time.

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