Prices for Some Drugs Skyrocket

The above headline comes from the August 2, 2008 front page of USA Today. The story reports that a small group of drugs has increased in price as much as 1000% over just 2 years. The increases are drawing criticisms from lawmakers. An additional Associated Press story in Business Week on August 8, 2008 noted that drug prices usually outpace increases in other consumer goods with most prices rising 7.4%.

The study conducted at the University of Minnesota noted that in 2004 only 22 drugs doubled in price. The report predicts that over 60 drugs will double in price this year. The stories note that most of the drugs that are showing huge increases in price are to treat rare ailments.

Examples of this include a drug called Cosmegen used to treat children's cancer. The research shows that the price for this drug rose from $16.79 in 2004 to $593.75 in 2006. Other drugs that have drastically increased include Acthar, which treats spasms in babies, and has increased from about $1,650 a vial to more than $23,000.

Alan Goldbloom, president of Children's Hospitals and Clinics of Minnesota commented on the increases by saying, “This does drive up the price of health care. Hospitals are either eating the cost or passing it along to insurers, so you and I are paying it in increased premiums.”

Professor Stephen Schondelmeyer, a researcher at the University of Minnesota's PRIME Institute offered an explanation for some of the increases by saying, “When you get past the top 500 drugs or so, most employers and payers just don't have time to monitor this information, and that creates an opportunity for extraordinary price increases.” He added, “Some companies seem to figure no one is watching so they can get away with it.”