OECD warns over high-priced drugs

Organisation for Economic Cooperation and Development warns over high-priced drugs which pushes health budgets

Photo by: Reuters
Photo by: Reuters

OECD warns over high-priced drugs

Special medicine for which pharmaceutical companies demand high prices for are straining the health budgets of wealthy nations, the OECD said on Wednesday, with drugs accounting for about 20 percent of all health spending.

Across the 33 OECD countries, pharmaceutical spending reached $800 billion in 2013, and new drugs and rising demand are likely to continue to push that level higher, the Organisation for Economic Co-operation and Development said.

On average, one in every five health dollars is spent on pharmaceuticals in OECD countries, raising concerns about how long patients and governments can afford such expensive drugs.

"The emergence of new high-cost, specialty medicines targeting small populations and/or complex conditions has prompted new debate on the long-term sustainability and efficiency of pharmaceutical spending," the organisation said.

In the United States, in 2013, the spending for each person on medicines was twice the OECD average and more than 35 percent higher than in Japan, the next biggest spender, the Paris-based OECD said in its "Health at a Glance" report.

At the other end of the scale, Denmark spent less than half the OECD average of $500 per person on retail pharmaceuticals.

The OECD's report offers more ammunition for industry critics, such as US. Democratic presidential candidate Hillary Clinton, who argue that drug makers are overcharging some wealthy nations for their medicines.

An analysis carried out for Reuters last month found that US prices for the world's 20 top-selling drugs are, on average, three times higher than in Britain.

The OECD report warned that rising demand for pharmaceuticals coupled with what it called "new treatment opportunities" would continue to push drug-spending even higher.

"The quantity of drugs consumed has increased over time in many therapeutic classes," it said, noting that between 2000 and 2013 the use of drugs for hypertension, diabetes and depression nearly doubled in some OECD countries, while use of cholesterol-lowering drugs tripled.

"These trends reflect an increasing demand for pharmaceuticals resulting from the rising prevalence of chronic diseases, population aging (and) changes in clinical practices."

Rising rates of cancer, diabetes and mental illness are adding to the demand for drugs, the report said. Aging populations and improvements in diagnosis, leading to earlier treatment, are also contributing to rising consumption. So too is the development of more medicines to treat common conditions.

In South Korea and the Netherlands, for example, spending per capita on pharmaceuticals rises rapidly with age, the OECD said.