The Cost of Medicine

Happy Monday. Pardon our absence, but LillyPad spent the last several days floating around cyberspace (along with several other websites). It's good to be back. Now, as I was writing last week.....

The cost of buying medicine often is identified as a driver behind the need to reform our health care laws (despite consistent data for years saying pharmaceuticals comprise 1/10 of the overall health care bill in the U.S.)

Costs often seem higher to consumers because because insurance coverage for pharmaceuticals can vary -- and we're sensitive to that point. But as the federal defict -- and the related cost of health care -- continues being debated, an important report has been released by IMS Institute for Healthcare Informatics. The report says spending on prescription drugs grew 2.3 percent in 2010 -- the second-lowest growth rate in 55 years -- while real per capita spending growth was less than 1 percent while spending on brands actually slowed by 0.7 percent.

There are many reasons for the slowdown. We had a less harsh flu season and fewer doctor visits across the country than in 2009. And very importantly, more branded drugs lost patent protection - leading consumers to use generics at a higher level.

According to IMS, generic prescription market share reached 78 percent in 2010 - or, 4 percent higher than in 2009. The broad availability and high utilization of generics signals strong efficacy in the innovative market, and we fully recognize the important role of generics in the lives of consumers. But it's also important to remember that generics exist only because of the pharmaceutical industry. Generic companies reproduce what companies like Lilly have innovated - and while there is a role for their business model, it underscores the importance of preserving an environment that supports innovation. Without that environment, new innovations (and therefore new generics) won't be introduced.

By hitting the right mix, we can keep costs down for consumers while moving innovation forward to address dire needs like Alzheimer's disease, diabetes, and cancer.