But, recently prescription drug users are becoming price sensitive due to global financial crisis. May be for that reason, 20% of prescription drug users cited price as a reason for switching retailers in January 2009, which is up from 16% in 2008 (Medical News Today, 2009). Consumers say they are spending an estimated 3% less on prescription drugs this year versus last year thanks, in part, to the economic downturn, according to Kurt Salmon Associates’ recent evaluation of more than 8,000 shoppers’ opinions (Medical News Today, 2009).
This decline is the result of continued shift towards the lower-cost generic drugs and growth of consumers who are looking to save money by simply reducing overall drug consumption. But this situation is worse than previously anticipated. Due to global financial crisis, the economic condition is vulnerable. For this reason, the high price of prescription drug will affect the economy adversely much more than previously anticipated.
The Medicare prescription drug improvement and modernization act of 2003 addresses prescription drug costs for Medicare beneficiaries (Wagner, et. al., 2001). It enhances on some important issues to solve and therefore to manage the over coming problems regarding prescription drugs.
According to a report estimated by Boards of Trustees of the Federal Hospital and Medical Insurance Trust Funds, The drug benefits total cost in United States is about $16.6 trillion in present value terms (Antos & Gokhale, 2005). In Medicare field, the already financial massive shortfall without the new benefit is some $45.0 trillion. In 2006, when the full phase-in of prescription drug coverage is completed, Medicare’s projected expenditures will immediately jump to 3.4 percent of GDP (Antos & Gokhale, 2005).
So, this rapid growth for prescription drugs is very difficult to sustain, even for the largest economy in the world. Prices of a number of drugs have tremendously in recent time when people are trying to struggle with ongoing financial crisis and rising prices of essentials. According to a report the recent following information are very important to consider.
In December 2005, the average cost of ten drugs was $1,114, but just after two months it increased to $1194, a 4.3% increase. In 2005, the total increase for these drugs was 3.4%.
9 out of 10 drug plans increased the prices from December 2005 to February 2006.
7 out of 10 drugs increased their price from December 2005 to February 2006.