December 27, 2012 | Posted By Bruce D. White, DO, JD

In 2012, the percentage of money spent on providing drugs to patients in the United States continued to rise (Hoffman et al., 2012). However, this is a US trend not seen in other developing countries – such as Canada – where national drug expenditure percentages are slowing year after year (CBC News, 2012). In fact, in Canada, the rate of drug cost growth for this year is the lowest of the last 15 years. 

So, why? Simply put, the American pharmaceutical industry has fueled new drug innovation worldwide for decades. Now, the pharmaceutical companies have less money for research and development and are innovating less. When they do innovate, the companies spend their R&D allocations either on “me too” (imitation) drugs, or very, very expensive drugs for which insurance reimbursement is maximized. Market forces drive both these new drug lines. But now, the R&D well is clearly drying up (Adams, 2011).

So, is this fair? Is this just, ethical? Maybe it all depends on whether or not the world wants – or needs – drug innovation, because without the US pharmaceutical manufacturers there would be very little new drug developments at all. One must ask then: will Americans – like the rest of the world – become more accustomed to generic drug formularies that over time morph into a single national formulary approved by a governmental agency? (Of course, the national Veterans Administration drug formulary is like this now (Department of Veterans Affairs, 2012), so maybe there won’t be that much change after all.)

But how will future Americans deal with this? Americans who prize choice and individual decision-making and wide options keenly must balance individual and community risks and benefits better. Perhaps market forces will drive this re-balancing too. In fact, it is now through deliberate incentives and consumer demand. In fact, both the Clinton Health Security Act and the Obama Patient Protection and Affordable Care Act are legislative attempts to re-balance individual and community risks and benefits. In both initial proposals, drug benefits were more clearly tied to pharmacy formularies that were grounded in generic drug availability. Under both there was no allocation for new drug research and development.

One can hardly imagine how long any transition might take. As the “blockbuster drug” era ends and the age of “personalized drug therapy” dawns, costs are certain to rise (Bogoslaw, 2010). Wonder if this new era will be any fairer or more just?

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