Strong Medicine: The Cost of Prescription Drugs

One simple trick to bring down medical costs

August 2021

Script

This video is part of our Kite & Key Shorts series—easy to understand...but hard to forget.

 

Why are prescription drugs so expensive?

Actually, hang on. Are prescription drugs expensive?

Not always.

In fact, 90% of prescriptions filled in the United States are generic,i and the average patient pays just $8 out-of-pocket for a generic prescription.ii

High prices mainly occur with new, cutting-edge treatments.

One reason? It costs an average of $2.6 billion to develop a single new drug.iii

The good news: even drugs that start out expensive rarely stay that way.

Just one generic competitor can lower prices nearly 40%,iv so the key to lowering drug costs is to get more generic drugs on the market.

One way to do that is to speed up the approval process.

The faster generic drugs get approved, the quicker they hit shelves and bring down prices.

High drug costs can be a real hardship, but we can lower them through competition and still preserve our access to life-saving medicine.

 

WHAT YOU NEED TO KNOW:

  1. 90% of prescriptions filled in the U.S. are generic—and the average patient pays only $8 out-of-pocket for them. 
  2. The price of new drugs is high because the average cost of drug development is $2.6 billion. 
  3. The introduction of just one generic competitor can lower drug prices by nearly 40%. 

Sources

  1. “Generic Drugs” — U.S. Food and Drug Administration
  2. "IMS Health Study: U.S. Drug Spending Growth" — Business Wire
  3. “Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs” (Joseph A. DiMasi, Henry G. Grabowski, Ronald W. Hansen) — Journal of Health Economics
  4. Generic Competition and Drug Prices” — U.S. Food and Drug Administration 

Shownotes

SOUND: “Flying in the Clouds” (DP)

FOOTAGE: Adam Niescioruk (Unsplash)

CITED SOURCES AND NEWS OUTLETS ARE NOT AFFILIATED WITH THIS PRODUCTION.

Sources

  1. U.S. Food and Drug Administration
    “Generic Drugs” 
  2. Business Wire
    "IMS Health Study: U.S. Drug Spending Growth"
  3. Journal of Health Economics
    “Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs” 
    (Joseph A. DiMasi, Henry G. Grabowski, Ronald W. Hansen)
  4. U.S. Food and Drug Administration
    Generic Competition and Drug Prices”

Delve Deeper

Bonus Content

More Videos

September 2021

How Western States Can Avoid Water Shortages

Water scarcity isn’t inevitable.
Watch Now...

September 2021

Who Makes It Into “The Top One Percent”?

The highest-earning Americans…often don’t stay at the top for long.
Watch Now...