With Generics Looming Will Focus Turn To Other Major Health Costs?
A little late to the party, the New York Times published a major article today focusing on how the rise in generic medications is starting to “pinch the profits†of major drug firms. According to the Times:
“A quiet coup is taking place in American medicine cabinets. Prescription bottles bearing catchy brand names like Zoloft and Flonase are being pushed aside by tongue-twisting generics like sertraline and fluticasone propionate. While the trend is already pinching the profits of big pharmaceutical companies, it is rare good medical news for American pocketbooks.â€
Investors and other drug industry observers have long known that drug firms’ profits are being threatened by a wave of generic drugs. In addition, many have lamented the fact that few companies are prepared to weather the storm as their product pipelines have dried up.
What I’m interested in is whether the dip in drug prices will cause the public to turn their attention to other major drivers of health spending. According to an article published in Health Affairs in late 2006, prescription drugs accounted for 7.2% of spending on healthcare that year. In contrast, money spent on physicians, outpatient care and other services outstripped dollars devoted to drugs.
Only time will tell if the reduction in medication price pressures will ease negative commentary about drug firms’ pricing strategies. However, I’m not holding my breath on that score.
Image Source: Blue Cross, Blue Shield
