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An interesting study on prescription drug costs was released this morning.

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http://biz.yahoo.com/rf/020329/business_health_drugspending_dc_2.html

Prescription Drug Sales Rise 17.1 Percent

By Edward Tobin

NEW YORK (Reuters) - Demand for high cholesterol medicines and arthritis treatments helped drive U.S. prescription drug spending up 17.1 percent to $154.5 billion in 2001, according to a study released on Friday.


Drug makers said the study is a sign that more people are being treated for diseases with medicines that can save lives and help avoid more expensive treatments, such as surgery and hospitalization.

Sales of a relatively small number of prescription drugs, including Pfizer Inc. (PFE - news) and Merck & Co. Inc.'s (MRK - news) cholesterol fighters Lipitor and Zocor, accounted for the lion's share of the rise in drug spending, according to the study from the National Institute for Health Care Management (NIHCM) Foundation.

``We see that the rise in pharmaceutical expenditures is led by the increased use of a relatively small number of expensive drugs,' says Nancy Chockley, president of the NIHCM Foundation -- a Washington D.C. based non-profit organization, which is funded by Blue Cross and Blue Shield health plans and grants from the U.S. government and private health care foundations.

U.S. retail sales of Lipitor, the top-selling drug in 2001, rose 22.3 percent to $4.5 billion in 2001, while sales of Zocor jumped 24 percent to $2.7 billion.

Chockley said the study reveals where the new spending is going, ``and perhaps also where we might get the most bang for our buck in savings.'

Last year was the fourth year in a row that spending on prescription medicines in pharmacies, food and discount stores, and mass merchandisers escalated 17 percent or more, according to the study. Retail spending on outpatient prescription drugs has nearly doubled from $78.9 billion in 1997.

``While I understand that NIHCM and the Blue Cross and Blue Shield companies that fund it are focused on cutting costs and restricting access, it's important to look at the value and long-term savings that innovative medicines can bring,' said Alan Holmer, president of Pharmaceutical Research and Manufacturers of America, the industry trade group for U.S. drug makers.

He said higher spending on outpatient prescription medicines ``means that more people are getting treatment they need and, in many cases, avoiding more costly and more invasive treatments.'

Rising sales of 50 drugs, out more than 9,000 in the retail market, accounted for 62 percent of the $22.5 billion increase in retail drug spending in 2001, according to the study. Higher volume and higher costs of prescriptions written also fueled the surge in spending.

Antidepressants remained the top-selling category of drug in 2001, with sales of $12.5 billion, up 20.2 percent. Anti-ulcer drugs, led by AstraZeneca Plc's (quote from Yahoo! UK & Ireland: AZN.L) Prilosec, were the second biggest sellers as a category, with retail sales of $10.8 billion, up 14.4 percent.

Other notable sales increases included Merck's arthritis drug Vioxx, which rose 33.5 percent, and Wyeth's (WYE - news) ulcer drug Protonix surged 490 percent. The painkiller OxyContin, made by Purdue Pharma, rose 41 percent and the antipsychotic drug Zyprexa rose 28.6 percent.

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