NCPA - National Center for Policy Analysis

Drug Costs Up Because We're Medicating More

November 27, 2000

Americans are shelling out more for prescription drugs. But that's not because pharmaceutical firms have been hiking prices. In fact, we have been increasing our intake of pills and other medications.

  • Overall spending for prescription drugs has more than doubled since 1990.
  • Yet prices for existing drugs -- as opposed to newly introduced drugs -- have risen at a mere 2.8 percent average annual rate.
  • More than four-fifths of the spending surge reflects greater overall use of prescription drugs, combined with a shift in demand toward newer, more expensive medications, according to the Kaiser Family Foundation.
  • On a per-capita basis, annual usage jumped 32 percent between 1992 and 1998 -- to 9.6 prescriptions per person.

Consumer advertising by drug makers tripled between 1995 and 1998.

Source: Gene Koretz, "Why Those Drug Costs Are Up," Business Week, November 6, 2000.


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