Incremental advances in pharmaceutical innovation help lower drug costs while improving the quality of care.

New entries to a class of existing drugs increase competition and lower costs as incremental innovations compete for market share with existing drugs.

Most major advances in drug therapies come from incremental improvements - the development on new agents within existing drug classes. The evolution of existing drug therapies results in the development of safer, more effective medicines that are usually easier to use, cause fewer side effects and are less costly.

An analysis of pricing for 20 new entrants to drug classes in 8 therapeutic areas that accounted for more than half of total 1999 retail drug expenditures, reveals that the majority of new drugs were launched at discounts to the average price of existing drugs within the therapeutic class. Of 20 drugs examined, 13 were launched at prices at least 5% and as much as 53% below the average price, 5 were launched at a price ranging from parity to a 5% discount and 2 entered the market at a premium to the average price but still discounted relative to the price leader.
“Over time, incremental innovation has resulted in striking improvements in existing drug therapy and patient care, and in some cases reduced total costs for therapy”