Projecting future drug expenditures--2000

Drug cost projections for 2000 and factors that are likely to influence drug costs are discussed. The total increase in drug costs in 2000, assuming there are no major unforeseen events (e.g., Medicare coverage of outpatient prescriptions or important new drugs) can be anticipated to be 12-15% above that in 1999. Prescription drug expenditures are projected to increase an average of 11.2% annually between 1999 and 2001. Although there were fewer new drug approvals in the first half of 1999 than in 1998, we can expect that many new, important, and probably expensive agents will be coming to market in 2000. Analysts calculate that pharmaceutical companies invested approximately $24 billion in research and development in 1999, and there are predictions that mergers within the pharmaceutical industry will reduce the number of major pharmaceutical firms to 13. The introduction of pharmacogenomics is of great interest because of its potential to significantly affect drug therapy and the discovery of new agents. Sales of generic drugs are anticipated to increase from $12 billion in 1999 to $14 billion in 2000. Competition between the brand-name and generic drug industries is intensifying, but it remains unclear whether generic drug pricing will offset brand-name price increases. Internet pharmacy has become a reality and is under federal and state scrutiny. The pharmaceutical and drug distribution industries are changing dramatically, and there is concern that many new prescription drugs will not be readily available to patients because of their high cost. Should this occur, action by the federal government is a possibility.