Wednesday, November 10, 2004

Who's to blame for high drug costs?

The New Yorker has another great article, this time on prescription drug prices. Here's an excerpt:
The problem with the way we think about prescription drugs begins with a basic misunderstanding about drug prices. The editorial board of the Times has pronounced them much too high; Marcia Angell calls them “intolerable.” The perception that the drug industry is profiteering at the expense of the American consumer has given pharmaceutical firms a reputation on a par with that of cigarette manufacturers.
I certainly have had complaints with the Times. Marcia Angell is a former editor-in-chief of The New England Journal of Medicine, and she gets a fair amount of criticism in this article.

The author contends that high prices are not exclusively the fault of the drug companies; some blame rests on doctors and medical journals, too. Sometime drug companies put out new drugs that are barely different than old drugs, but it's the job of doctors and medical journals to see through that. They should prescribe generics whenever possible, but often they prescribe expensive new drugs as a matter of course. Some people believe that doctors have an altogether too cozy relationship with drug companies, who fly them out to conferences and give them various perks. Op-eds written by doctors usually blame the drug companies for everything, though.

Luckily, doctors don't necessarily need to take on the responsibility of cost control. That responsibility rests with the insurance companies. If we can divorce health insurance from employers so that people can make decision on which company to use, each insurance company will have powerful incentive to use generics wherever possible as an easy way to cut costs while still providing the same level of service. We need to introduce real competition into the market.


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