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Recent PSW discussions have focused on a variety of cost center increases for the American consumer. Healthcare is one expense that is increasing faster than inflation. Over the past 12 years prescription drug prices have outpaced the two largest healthcare costs, hospital care and physician services (Figure 1). However, pharmaceuticals only make up 10% of all healthcare costs, while hospital and doctor costs make up 52% of the total $2.3T (Figure 2). More effective prescription drugs and vaccines have transformed health care over the last several decades and many health problems have been prevented, cured, or managed effectively through the use of these agents.1 In some cases, the use of prescription medicines have kept people from expensive health care options such as hospitalization and/or surgery. Yet, the debate over controlling the costs of prescription medications will be debated over the coming years, and will be interesting to watch the outcome.
Figure 1. Percent increases of Prescription Drugs, Hospital Care and Physicians (2010, Kaiser)
Figure 2. Health Care Costs (2010, Kaiser)
Total = $2.3 Trillion
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group.
In the meantime, the pharmaceutical industry is headed for a patent expiration cliff as pointed out last year in my article here, and more recently in the NYT’s article here. Pharmaceuticals make up a big part of our life, as in 2007, 90% of seniors and 58% of non-elderly adults relied on a prescription medicine on a regular basis.2 The public demands safe, effective drugs, but the costs to bring these medications to market are becoming more expensive. Development costs have soared in the most recent analysis by Tufts. Their research showed a 64% increase in the cost to discover and bring a new drug (not a reformulation or recombination of an existing drug) to market from $802M in 2000 to $1,320M in 2006. Pharma also must recoup the R&D costs for drugs that make it to market, as well as those that do not. Only one in five drugs that make it to the clinical testing process receive FDA approval and are brought to market.8 The pharmaceuctical industry must reinvent itself, and personalized medicine is the next wave to take the industry by storm.
Personalized medicine is about…
