"Help us, Wal-Mart
A new study from Barclays came out showing that despite government attempts to keep prescription drugs' costs down, prices are actually accelerating, up 6.9% last year, the highest increase since Barclays started tracking them in 2000. Among the biggest offenders were Johnson & Johnson's
The likeliest cause of this: getting while the getting is good. Added government muscle thanks to the health-care reform act could weigh on future profits, but staring off the patent cliff into the abyss is really what has Big Pharma scared stiff. In Pfizer's
That said, as far as health-care costs go, increasing the availability and use of generics provides a huge opportunity. Reuters recently reported on a University of Pittsburgh study that found the U.S. would save up to $5.8 billion annually if those eligible switched to discount drug plans such as those offered by large retailers Wal-Mart and Target
Unfortunately, while billions of dollars a year sounds like a lot of money, the expected savings for eligible consumers comes out to just $64 per person annually. That's just a drop in the bucket compared to the $6,000-plus we spend per capita on average in the United States. However, it represents an example of how a more efficient system can create savings and those savings can add up quickly when you aren't looking. Long term, the big issues still need to be solved, but in the meantime every bit helps.
David Williamson owns shares of Johnson & Johnson and Pfizer. Johnson & Johnson, Pfizer, and Wal-Mart are Motley Fool Inside Value recommendations. Novartis and Wal-Mart are Motley Fool Global Gains selections. Johnson & Johnson and Wal-Mart are Motley Fool Income Investor recommendations. Motley Fool Options has recommended a diagonal call positions on Johnson & Johnson and Wal-Mart. The Fool owns shares of Johnson & Johnson and Wal-Mart. Motley Fool Alpha LLC owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.