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Overview Why Drugs Are Expensive Spiraling Drug Cost The Truth About Generics Myths and Facts
Spiraling Drug Cost
Industry experts predict that drug expenditures will rise 11.7% a year between 2003 and 2007 and an average of 10.3% a year between 2008 and 2011, according to a report by the National Institute for Health Care Management Research and Educational Foundation. "This will result, in part, from increased use by aging 'baby boomers,' those who are now between 44-55 years old, with, for example, drugs that treat high cholesterol," says Jim Richards, R.Ph., professor emeritus, Pharmacy College of the University of Michigan.
  "This is a good news/bad news scenario," Professor Richards says. "The bad news is that drug costs are going up by double digits. The good news is that increased use of drugs, especially maintenance drugs, has helped improve our general health and quality of life."
While the development of drugs is helping extend and save lives, the higher cost of drugs raises the total cost of your health care policy. This means health insurance rates go up. If your employer covers you at work, chances you're now contributing more from your paycheck than you ever did. Although your portion may be growing larger, it pales against the real cost of drugs. Just a one percent increase in generic drug use would save companies millions of dollars a year. Members would also save millions in copayments.
According to the Congressional Budget Office, purchasers of generic drugs already are saving an estimated $8 to $10 billion a year at retail pharmacies.
  Generics Can Help
Generic drugs are priced a lot lower than the equivalent brand-name versions - usually 30-75 percent less. Why? Generic drug manufacturers spend less on advertising and product development. The name equivalent is already well known while the generic has the same active ingredient. Because several different manufacturers may produce generic versions of the same medication, competition can drive prices down.
Generic drugs also enable senior citizens to lower their cost for prescription medications. Senior citizens represent 13 percent of the U.S. population, but they account for 25 to 33 percent of the prescription drugs used each year. Senior citizens use an average of 11 different prescriptions per year, so buying generics has the potential for significant savings.
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