| 摘要 | A few weeks ago, AARP released another of its “RX Price Watch” reports intended to inform consumers, especially seniors, of recent trends in drug prices. The report looks at retail price increases in recent years of brand-name drugs, categorized by patent status. The authors’ most notable finding is that the price of a brand-name drug about to go off-patent increases by as much as 14 percent in the year before patent expiration. The authors also show that brand-name prices continue to increase after those drugs lose patent protection, albeit at much lower rates. While the goal of informing its constituents about prescription prices is noble, AARP continues to mislead the public about the true trend and nature of pharmaceutical prices by maintaining a narrow view of the market.
Most generally, it would be unfortunate for anyone to see a story about “drug price increases” and assume the drug market is in the hands of some pharmaceutical price dictator. Before patent expiration, drugs face intense competition from other brands within their therapeutic classes, such as high cholesterol or allergies. After brand-name drugs lose patent protection—a period that allows manufacturers to recover capital investments and earn a profit—generic competition for each drug increases rapidly and significantly. For the most widely used drugs, generic market share can increase to almost 90 percent within one year. As more generic manufacturers produce a certain drug, prices of generic forms drop significantly as well.
Indeed, the AARP and the Government Accountability Office (GAO) have observed in various reports that the average price of generic drugs decreases each year. In the last decade, a number of widely used brand name drugs, including simvastatin (Zocor) and pravastatin (Pravachol), have lost patent protection and have become available for a reduced price. An analysis of how drug price changes impact consumers should take into account these dramatic changes in prices following generic expiration.
Numerous recent studies have taken into account the proportional market share of generics and brand-name prescriptions to document just how the “average” prescription price has changed. On the whole, drug prices have remained flat for some consumers and declined for others in the last five years. Express Scripts released a study days ago showing that the price of traditional drugs increased by about 1.5 percent in 2010 and about 15 percent total from 2006 to 2010 (inflation over the same period was about 10 percent.) A February GAO report found an annual increase of 2.6 percent from 2006 to early 2010 in the Blue Cross/Blue Shield Federal Employee Program. Similarly, in their National Bureau of Economic Research paper in October, Ernst Berndt and Murray Aitken found that average prices for the top drugs used by Medicare beneficiaries decreased by about 20 percent from 2006 to 2009. (They presented their paper at the American Enterprise Institute in November.)
All that being said, one might still argue that brand-name drug manufacturers should not increase prices, especially after patent expiration. Implicit in such an idea is that drug makers have earned outsized returns at the patient’s expense. In fact, manufacturer revenues have remained largely stagnant over the last five years, even though “retail” brand-name prices have increased, and annual manufacturer revenue from retail prescriptions grew by about 10 percent from 2005 to 2009 (Berndt and Aitken 2010). Considering that inflation over the same period was about 10 percent, manufacturers experienced little if any real revenue growth.
That stagnation contrasts with the growing R&D spending by manufacturers, which hit a record $67.4 billion in 2010, a 32 percent increase from 2005 levels. Companies use financial gains earned before and after patent expiration to invest in their product pipelines, which in turn promote the health of the population as new and better drugs are produced.
What, then, can one make of the contradictory observations of increased retail prices and stagnant revenue? Further research is in order, but there are several potential explanations. One is that discounts and rebates that manufacturers give payers, such as insurance companies, have likely increased as retail prices have increased. Because of these negotiated discounts, consumers and their insurance companies pay a fraction of the full “retail” price, which is what AARP tracks in its survey. As a result, AARP likely overstates the true cost paid by consumers. Out-of-pocket spending on prescriptions increased about 1 percent annually from 2005 to 2009, far less than the rate of price growth indicated by AARP, according to National Health Expenditure data. (Private and public health insurance provider spending increased about 7 percent annually, mostly attributable to Medicare’s prescription spending.)
Another area ripe for further research concerns how demand for prescriptions increases price. For example, Berndt, Thomas McGuire, and Joseph Newhouse show in a recent primer on pharmaceutical pricing that prescription coinsurance rates can greatly influence market drug pricing. This kind of analysis will benefit consumers and health insurers alike by providing insight into more optimal insurance design.
Consumers would be better served if AARP provided information on whether specific pharmaceuticals—brand name and generic—improve survival and quality of life. The organization could inform constituents on whether they are getting good value for their money, or whether they may be better off spending it on something else. AARP members could use such information to ask doctors more questions about the drugs they are taking. In doing so, they could contribute to a “true consumer revolution in healthcare” (as AEI’s Joseph Antos recently put it) with lasting benefits for patients and society.
One last comment about the recent AARP report is in response to a footnote in it that incorrectly labels an October AEI publication by the late Jack Calfee as “industry-funded.” That Health Policy Outlook was the product of Calfee’s intellectual prerogative alone. This article was not industry-sponsored either.
Gabriel Sudduth is a research assistant in health policy at the American Enterprise Institute.
Image by Rob Green/Bergman Group. |
