Prescription drug prices rise

July 1, 1997

Pharmaceutical Representative

Prices for prescription drugs rose 2.3% in the first quarter of 1997, according to the research firm IMS America, Plymouth Meeting, PA.

Prices for prescription drugs rose 2.3% in the first quarter of 1997, according to the research firm IMS America, Plymouth Meeting, PA.

Although higher than previous increases - 1.8%, 2.0% and 1.8% in the second, third and fourth quarters of last year, respectively, - the growth is parallel with the current rate of inflation. The U.S. Bureau of Labor Statistics measured the consumer price index at 2.8% and the producer price index at 4.0% for all items in March 1997.

"While prices for some branded products accelerated, prices for most of the drugs manufacturers rely on for profit rose only modestly," said Robert N. Merold, IMS's vice president of marketing. "The overall pricing trend for pharmaceuticals is still in line with government pricing indexes."

Overall, the report showed that prices went up 2.9% compared with a year ago. Prices for branded drugs sold to retail pharmacies rose 4.6%, up from 3.9% last quarter, while prices of generic products fell at an annualized rate of 13.1%.

In the non-retail sector, which includes hospitals, clinics, HMOs and long-term care facilities, prices increased only 1.0% compared with last year. Staff-model HMOs led the growth at 3.4%, while federal facilities experienced a 2.4% decrease in prices.

Measured by dollar sales volume, the average price increases for the top 10 branded pharmaceutical products were significantly lower than the overall rates for other brands, according to the report.

The research firm concluded from the strong sales growth and modest price changes that price is not the engine driving market growth rates. Rather, new products, which are up 6.7%, and volume from existing products, which rose 4.3%, are stronger industry drivers. (For more information on industry drivers, see the article on page 8.) PR