Role of the pharmaceutical industry in health care cost containment.

The pharmaceutical industry in the United States is comprised of 50 major companies whose total sales for 1983 were approximately $17 billion, slightly more than 10% of the total revenues of the hospital industry in the same year. Prescription drugs have long been considered a highly cost-effective treatment. Past history, consumer price indexes, a decline in share of health care spending and recent Pharmaceutical Manufacturers Association studies all indicate that drugs represent an economical form of treatment that can reduce overall health care costs. It is clear that the pharmaceutical industry can play a prominent role in containing costs within the health care delivery system. Research-directed companies can effect economies by developing innovative therapies that replace less effective, older or more costly ones. The federal government has recently provided powerful incentives to foster expansion of the industry, in addition to enacting legislation to contain public health care costs. During 1985, the research-directed industry will invest close to $4 billion in both basic research and specific product development projects. The largest portion of these funds continues to be devoted to developing superior cardiovascular drugs. The industry is also searching for better ways to define, document and present the cost-effectiveness of its products.