Pharmaceutical Pricing Practices, Utilization and Costs - Meeting Summary. 3. Price Trends for Prescription Pharmaceuticals: 1995-1999--Joseph DiMasi, Ph.D.


Dr. DiMasi presented conclusions about U.S. prescription drug pricing trends in the period 1995-1999 from an analysis he conducted as a consultant to the Drug Value Group at the Schneider Institute for Health Policy, Brandeis University:

  • Prescription drug prices were related to the purchaser's price sensitivity and the drug's value (benefits and risk).
  • Price trends for different therapeutic categories of prescription drugs--e.g., antiarthritics, antidepressants, antihistamines, antihyperlipidemics, antihypertensives, antiulcer drugs, and different types of antibiotics--varied over the period of the study.
  • New prescription drugs varied substantially in their impact on drug expenditures over the period of the study. Some new brand-name drugs were introduced at significant discounts to existing drugs that are highly substitutable with the new drug. Entirely new classes of compounds to treat a disease or condition were often priced at a premium relative to older brand-name drugs.
  • Among the factors that affected prescription drug launch prices were the drug's length of use (acute vs. chronic), convenience of use, and relative safety and efficacy. For example, patients using drugs for long periods are likely to be more price sensitive than patients using drugs for short periods, so average launch prices for drugs for acute conditions tend to be higher than drugs for chronic conditions (with some exceptions such as AIDS antivirals).

Given all the complexity in the realm of prescription drug prices, Dr. DiMasi said, it is very important to get to the issue of the proper use and true value of both new and old prescription drugs.