Medicines: Cost In Context

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Patients all over the world are living longer, healthier and more productive lives thanks to innovative medicines developed by biopharmaceutical companies.

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Spending and Pricing

Spending on retail prescription medicines has consistently accounted for just 10 percent of health care spending, even though biopharmaceutical companies have brought more than 500 medicines to patients in the United States in the past 15 years. In fact, the most recent national health spending projections show that it is expected to grow at rates in line with overall health care spending through 2024, even as important advances continue in areas such as cancer, hepatitis C and rare diseases. That's because the marketplace for prescription drugs is unlike any other part of the U.S. health care system. Payers aggressively negotiate prices (including in Medicare) and use their power to incentivize use of lower cost options. Over time, medicines come off patent and face additional competition from lower cost-generics which typically cost up to 80 percent less than the original brand medicine. This competitive marketplace is why the share of health care spending toward medicines has remained stable for decades while still providing incentives for the development of new treatments and cures.

Curbing Health Care Costs

Many medicines shift the treatment paradigm toward prevention by allowing patients to avoid expensive hospitalizations and long-term care. According to an analysis, the U.S. health care system could save $213 billion annually if medicines were used properly. And every additional dollar spent on medicines for adherent patients with congestive heart failure, high blood pressure, diabetes and high cholesterol generated $3 to $10 in savings on emergency room visits and inpatient hospitalizations. Medicines can also reduce the projected impact of diseases. In the fight against Alzheimer’s disease, new medicines approved by 2025 that delay the onset of Alzheimer’s disease by five years would reduce the number of people with the disease by approximately 40 percent and avoid $367 billion annually in long-term care and other health care costs by 2050. So not only do medicines help patients live longer and healthier lives, but they can also help avoid health care costs.   

Investing in New Medicines

Prescription medicines save people’s lives and cut health care costs, but developing a drug is a challenging undertaking – and the science is only getting harder. While it may sound counterintuitive, as our understanding of science grows, so does the complexity of developing new medicines – particularly as treatments are increasingly tailored to the unique needs of individual patients. Failure is an inherent part of this complex process and the odds of success are low – just 12 percent of drugs entering clinical trials ever making it to patients. And thousands will not even make it past the early discovery and pre-clinical testing stages. That is why discovering and developing new treatment and cures is such a complex and risky undertaking. On average, it takes more than 10 years for just one medicine to make its way through the entire R&D process. And the average cost to develop just one medicine has risen to $2.6 billion. Despite these risks and challenges, America’s biopharmaceutical companies are tireless in their pursuit of discovering new innovative medicines to improve the lives of patients.

Saving People’s Lives

Innovative medicines have transformed the trajectory of many debilitating diseases and conditions, helping patients live longer and healthier lives. Today, thanks in part to innovative medicines, the U.S. death rate for HIV/AIDS has fallen nearly 85 percent since its peak, and is now considered by many to be a manageable chronic disease. Through the use of innovative therapies, death rates from cancer in the U.S. have fallen 22 percent since their peak in 1991. And now 2 out of 3 patients diagnosed with cancer are living at least 5 years after their diagnosis. Therapeutic advances have also transformed treatment of rheumatoid arthritis. Medicines used to be limited to treating the symptoms of the disease. Today, medicines can target the underlying sources of inflammation, halting progression of the disease. Additionally, cardiovascular death rates have dropped 31 percent in the last decade. Today’s medicines are at the forefront of science with many new treatments taking a targeted approach to attack underlying causes of disease.

Partnership for Prescription Assistance

The Partnership for Prescription Assistance helps connect uninsured and underinsured Americans to programs that provide prescription medicines for free or nearly free.

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Access Better Coverage

Access Better Coverage is an educational resource designed to help consumers understand the ABCs of health coverage and access to prescription medicines.

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