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Drug Cost Growth

The U.S. Pharmaceutical Industry: Why Major Growth In Times Of Cost Containment?

Growth in utilization rather than price, particularly since 1994, has been the primary driver of increased pharmaceutical spending. In this paper I focus on four factors that have increased utilization, even as cost containment efforts have flourished: (1) "the importance of being unimportant"; (2) increased third-party prescription drug coverage; (3) the introduction of successful new products; and (4) aggressive technology transfer and marketing efforts by pharmaceutical firms. I also consider the roles that these four factors are likely to play in the future.

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