Outrageous Fortune: How the Drug Industry Profits from Pills

Source: Dianna M. Porter, Alliance for Retired Americans Educational Fund, August 2007

The volume and expenditure for drugs sold has increased dramatically in recent years. Between 1994 and 2005, the number of prescription drugs purchased has increased 71 percent– from 2.1 billion to 3.6 billion–compared to a U.S. population growth of 9 percent. The U.S. Department of Health and Human Services projects national prescription drug spending will increase 148 percent from 2005-2016.

Despite the claims of supporters of the 2003 Medicare Modernization Act (MMA), the new drug benefit provided by private insurers has not reduced prescription drug prices for Medicare beneficiaries or the program. Overall, it is projected that Medicare beneficiaries will spend $1.2 trillion on prescription drugs over the next decade. Since the MMA took effect, Medicare is now the largest public payer of prescription drugs with Medicare spending rising to 22 percent of total U.S. prescription spending in 2006, up from 2 percent in 2005.

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