Chapter 8The Future of the Pharmaceutical Industry

Are drugs, which comprise about 10 percent of overall health-care costs,1 part of the health-care cost problem? Or are they part of the solution? Critics of the pharmaceutical industry often point to the rise in spending on pharmaceuticals—which doubled between 1995 and 2002—as a major culprit in the unsustainable increase in health-care spending during these years.2 Others assert that while they are expensive on a per-ounce basis, pharmaceutical solutions are much cheaper than other alternatives for care.

Both views have merit. Some drugs have helped to transform historically fatal acute diseases into chronic ones, allowing us to live longer with reasonable qualities of life. While extending ...

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