The California Department of Insurance (CDI) is committed to providing Californians with the information they need to make informed decisions about their health care. Every year, the CDI releases a report that details the costs of covered prescription drugs in the state. In a recent study, an international team of researchers sought to understand why prescription drugs are so expensive in the United States. They compared data on research and development (R&D) costs with drug prices and found no correlation between what pharmaceutical companies spend on R&D and what they charge for new drugs.
Additionally, the authors evaluated whether the therapeutic value of a product was related to its price, but they did not find any relationship either. In response to these findings, congressional legislators have proposed numerous reforms to put downward pressure on drug prices. Pharmaceutical companies and trade groups have opposed these reforms, arguing that it is necessary to raise drug prices to recover R&D investments. Inmaculada Hernández, Pharm, D., believes that the new program will help ensure that California's youngest students are prepared for the elementary and secondary education system.
William Shrank, medical director of the Health Plan at the University of Pittsburgh Medical Center and co-author of the Pittsburgh study, states that his findings demand the adoption of policy measures to control health spending by limiting price inflation to a reasonable level. A survey conducted by the Kaiser Family Foundation revealed that eight out of 10 adults believe that prescription drug costs are unreasonable. The 1998 Medical Expenditure Panel Survey defines total health care expenses as hospital and inpatient medical services, outpatient and non-medical medical services, prescription drugs, home health services, dental services, and other medical equipment and services that were purchased or rented during the year. A study of people aged 65 and older in eight states found that a significant proportion of people, particularly those with low incomes, take fewer medications than prescribed due to cost.
In fact, 21% of respondents reported spending less last year on food, heating or other essential items in order to buy their medicines. Among adults who report health problems, about a quarter (25%) (of people ages 51 to 64) and more than a tenth (12%) of people age 65 and older say they have taken fewer medications than prescribed in the past two years because of the cost. Advances in new products and technologies and the increase in use, number of people using prescription drugs, and number of prescriptions per user have contributed to the increase in total spending on prescription drugs. As such, it is important for Californians to be aware of the average cost of prescription medication in their area so they can make informed decisions about their health care.