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Projecting future drug expenditures--1992
1Practice Management and Managed Care Department, American Society of Hospital Pharmacists, Bethesda, MD.
American Journal of Hospital Pharmacy
|January 1, 1992
Summary
Future drug spending depends on inflation, generic competition, and new drug approvals. Analyzing historical data and patent expirations helps predict these impacts on pharmaceutical prices.
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Drug Pricing Analysis
Background:
- Future drug expenditures are influenced by multiple dynamic factors.
- Understanding these factors is crucial for accurate financial forecasting in healthcare.
Purpose of the Study:
- To analyze the impact of inflation, generic competition, and new drug entities on future drug expenditures.
- To provide insights into predicting drug pricing trends.
Main Methods:
- Utilizing historical data and trend analysis for inflation prediction.
- Examining patent expiration and market exclusivity for generic competition assessment.
- Reviewing the new drug application (NDA) to FDA approval timeline for new drug entity forecasting.
Main Results:
- Inflation is predicted to increase pharmaceutical prices by 6.4%-10% annually.
- Generic drug introduction can decrease list prices by 30-70%, stabilizing around 50% of the innovator price.
- New drug approval processes typically take approximately two years from filing to market.
Conclusions:
- Accurate assumptions about future drug expenditures require consideration of inflation rates, generic market status, and new drug pipelines.
- Data sources like the Producer Price Index and HCFA indices are valuable for inflation analysis.
- Forecasting drug costs necessitates a multi-faceted approach incorporating economic and regulatory factors.