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By Ceci
Connolly
For the fourth straight year,
prescription drug spending rose more than 17 percent in 2001, driven in
large measure by a few heavily advertised, high-priced medications, a
nonpartisan study released yesterday found.
Sales of prescription medication
at retail stores and through mail-order companies totaled $175.2
billion last year, an increase of $27 billion over 2000, according
to the National Institute for Health Care Management. The institute is
a private, nonprofit research organization led by physicians, insurance
executives and policymakers from both parties.
Overall, pharmaceutical costs
continue to be the fastest-rising component of health care expenditures,
accounting for about 10 percent of spending. Although price increases
were part of the reason for the jump, the researchers found that drug
use and advertising were also prime factors. In short, more doctors are
writing more prescriptions for the most expensive, heavily marketed drugs.
While the trend was criticized
by some consumer advocates and politicians, pharmaceutical makers and
some economists said today's blockbuster drugs save not only lives, but
also dollars.
 "Although
we talk about how fast drug costs are going up, this is helping to reduce
the rate of growth of other medical costs," said Frank Lichtenberg,
an economist at Columbia University's business school.
In a number of studies, Lichtenberg
has found that modern medications help people live longer, with a better
quality of life, so they spend less time in hospitals and more time contributing
to society.
"Ultimately, they provide
tremendous benefits to society," he said.
Nevertheless, he said there
is plenty of waste in the pharmaceutical industry and "ridiculous"
decisions by doctors and patients about which medication to use when.
Take the people who insist upon eating fatty foods late at night and never
exercise, he said.
"They don't want to lose
weight or change their diet or take Tums. They're pummeled by advertising,
so they go to the doctor demanding" a prescription medication such
as Prilosec or Prevacid, he said. "That's a waste."
Frank Clemente, director of
Public Citizen's Congress Watch, said few doubt the value of the latest
medical advances, but he believes it appears the industry is price-gouging.
"The
prices are greatly in excess of what they need to have research and development
dollars," he
said. On average over the past decade, the pharmaceutical industry has
been the most profitable by far, he said, reporting profits about three
times the size of other Fortune 500 industries.
With so much money at stake,
both sides have invested heavily in shaping public opinion.
The National Institute for
Health Care Management, the author of the report, receives funding from
the federal government and insurers. Researchers such as Lichtenberg and
Vermeulen said they are subsidized by drug manufacturers.
Last year, about three dozen
drugs were responsible for half the total increase in expenditures, according
to yesterday's study.
Americans consumed record quantities
of well-known drugs such as Prozac, Lipitor and Prilosec to treat depression,
high cholesterol and heartburn, respectively.
Antidepressants
remain the top-selling therapeutic class, with $12.5 billion in retail
sales.
The average price for a prescription
rose 10 percent, from $45.27 to $49.84, the study found. The average price
among the 50 best-selling drugs was $71.56.
In many categories, two or
three medications dominated the market. Nearly 75 percent of the prescriptions
written to treat heartburn were for Prilosec or Prevacid, for instance.
Washington
Post March 29, 2002; Page A09
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