The cost of prescription drugs has risen steadily in the United States and faster than other types of medical services. This reflects not only rising prices for individual drugs, but also the growing benefits of drug therapy for an expanding array of diseases and disabilities.

Although drug expenditures account for only 10 percent of total health care costs, and using newer drugs reduces other health care expenses by $8 for every $1 spent on pharmaceuticals, insurance companies and government health systems often restrict access to new medicines to rein in drug spending. In fact, many in Congress now want to impose a national drug list on Medicare to control costs where there would be one ‘preferred’ drug—usually the cheapest product—that everyone would be mandated to use based on government medical guidelines (so-called “evidence-based medicine”). This would effectively steer patients towards lower priced generic alternatives and restrict access to more expensive new treatments.

Can health plans and Medicare use evidence-based medicine to control drug costs without compromising patient health and reducing incentives for medical innovation? Given the rapid growth in medical knowledge and the introduction of new medicines, can drug lists ever offer access to the best available treatments?

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