NCPA - National Center for Policy Analysis

Prescription Drug Costs Dropped in 2012

March 21, 2013

There was a drop of 1 percent in sales of prescription drugs in 2012 according to the research firm IMS Health.  While prescription drug sales have been slowing down, there has not been a drop since 1957. The overall sale of drugs is expected to go through a series of rises and declines before staying on a sustained path of growth, says the New York Times.

Possible reasons for the drop prescription drug prices include:

  • A weak economy with patients cutting back on doctor and pharmacy visits.
  • Loss of patent protections that helped clear the way for cheap generic alternatives.

End of the generics boom?

  • Eighty-four percent of all prescriptions were dispensed as generics in 2012.
  • IMS Health estimates that sales of generics will get no higher than 86 percent or 87 percent, as fewer major drugs are set to lose their patent protection over the next several years.
  • Moreover, many new drugs are so complex that it will be difficult to get the generic version to market once the patent expires.

IMS Health predicts that drug sales will rise by more than 4 percent in 2014. Consider:

  • Spending on specialty drugs rose by 18.4 percent in 2012.
  • Four specialty drugs approved for 2012 cost $200,000 per patient a year, according to Forbes.
  • Newly insured patients under the federal health care law will have easier access to prescription drugs.
  • Higher growth markets in countries such as Brazil, India and China have an expanding middle class that is increasingly able to afford prescription drugs.

The future is biosimilars, says the New York Times.

  • Biosimilar drugs have the same effect as the original drug, but they are too complex to be copied.
  • Biosimilars are already available in Europe.
  • They sell for anywhere from 30 to 50 percent less than the prescription drug price.

Source: Katie Thomas, "U.S. Drug Costs Dropped in 2012, but Rises Loom," New York Times, March 18, 2013.


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