Why is prescription drug spending rising so rapidly?
Although prescription drugs account for only about 10 percent of America’s health care costs, spending on these drugs has been rising far more rapidly than other health care componants. From 1995 to 2000, total retail prescription drug spending more than doubled, from around $65 billion to roughly $132 billion annually. Much of this increase is due not to price increases, but to a higher rate of drug use. As more people live longer and as more beneficial medicines are developed — particularly for chronic conditions like AIDS and asthma — prescription drugs have become a larger and larger part of the health care system. Critics of the industry argue that in addition to consumers’ increased use of medications, drug spending is rising because the companies are raising prices to increase profits, and spending more on advertising and marketing expensive brand name drugs to doctors and patients.
