Statement Regarding GAO Report on Drug Prices

Statement Regarding GAO Report on Drug Prices

Washington, D.C. (March 14, 2011) — Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO John J. Castellani issued the following statement regarding the Government Accountability Office’s (GAO) report on drug prices:

“We are pleased the GAO appropriately took into account the facts about how the biopharmaceutical marketplace works in its analysis of prescription medicine pricing trends. The report’s key finding shows prices have been increasing at a rate of 2.6% annually, which is lower than overall medical inflation.

“Any analysis of prices must take into account the mix of brand and generic medicines that patients actually use. Nearly 80 percent of all prescriptions are filled with generic drugs. Reports that ignore this fact exaggerate drug price trends and miss the point that it is the innovators investments that lead to pioneering advances that improve patient care – and over time it is the innovators investments in new brand medicines that lead to generic copies that are broadly used by patients at low cost for many years.

“Similar research conducted by economists at MIT and IMS Health indicates that attempting to evaluate prescription medicine pricing trends for brand-name medicines in isolation is a flawed approach that produces highly distorted results. Their research shows that average prices for top selling medicines have been declining.

“Moreover, according to data from IMS Health, spending for prescription medicines has been growing at ‘historically low’ rates. IMS data shows spending grew an average of 5% annually from 2004 to 2009, and is expected to grow at a rate of 3.5% from 2009 through 2013. “Too often, medicines are viewed as a cost and not as a savings, even though medicines often reduce unnecessary hospitalizations, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases. “Importantly, despite their small share of health costs – relative to other health services – medicines are yielding major health advances. For instance, prescription medicines have played a key role in the dramatic declines in death rates resulting from cancer, heart disease and HIV/AIDS in recent years. Our companies continued commitment to innovation is the driving force behind such medical progress.” 


The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $45.8 billion in 2009 in discovering and developing new medicines. Industry-wide research and investment reached a record $65.3 billion in 2009.

PhRMA Internet Address: http://www.phrma.org
For information on how innovative medicines save lives, visit: http://www.innovation.org
For information on the Partnership for Prescription Assistance, visit: http://www.pparx.org
For more information on public health emergencies, visit http://www.rxresponse.org
For information on the danger of imported drugs, visit: http://www.buysafedrugs.info

More On PhRMA — powered by PhRMApedia