HealthLawProf Blog

Editor: Katharine Van Tassel
Creighton University School of Law

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Monday, November 16, 2009

Health Care Reform Brings Price Increases From The Drug Industry At The Highest Rate In Years

The drug industry stands to gain about 30 million new customers with drug insurance from the legislation pending in Congress so it isn’t surprising that the industry is promising to support Washington’s health care overhaul. This support comes in the form of an agreement to cut $8 billion a year off the nation’s drug costs in the 10 years after the legislation goes into effect.  However, according to the New York Times, it appears that what one hand gives, the other takes away as the drug industry is raising its prices at the fastest rate in years. 

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.

But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement. And some critics say the surge in drug prices could change the dynamics of the entire 10-year deal.

“It makes it much easier for the drug companies to pony up the $80 billion because they’ll be making more money,” said Steven D. Findlay, senior health care analyst with the advocacy group Consumers Union.


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