Big Wall Street investment companies have jumped all over the Federal Reserve’s unprecedented offer to obtain emergency loans, with borrowing having more than doubled over the program’s debut week.
Those firms averaged $32.9 billion in daily borrowing over the past week from the new lending program, compared with $13.4 billion the previous week, the central bank reported Thursday. The program, which began last Monday, is part of the Fed’s effort to aid the financial system.
On Wednesday alone, lending reached $37 billion.
Agreement made earlier this month. The Fed, for the first time, agreed on March 16 to let big investment houses temporarily get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, will continue for at least six months. It was the broadest use of the Fed’s lending authority since the 1930s.
Last week, Goldman Sachs (GS, Fortune 500), Lehman Brothers (LEH, Fortune 500) and Morgan Stanley (MS, Fortune 500) said they had begun to test the new lending mechanism. The Fed does not release the identity of the borrowers using the facility.
The Fed created a way for investment firms to have regular access to a source of short-term cash. This lending facility is seen as similar to the Fed’s "discount window" for banks. Commercial banks and investment companies pay 2.5 % in interest for overnight loans from the Fed.
Investment houses can put up a range of collateral, including investment-grade mortgage backed securities.
Banks averaged $550 million in daily borrowing, for the week ending March 26, from the Fed’s discount window, compared with $81 million the previous week.
Bernanke on the Hill next week. Fed Chairman Ben Bernanke is scheduled to give lawmakers an updated assessment of the economic and financial situation at a hearing on Capitol Hill next Wednesday.
Also Thursday, the Fed debuted a separate lending facility where Wall Street firms can borrow Treasury securities and put up risky home-loan packages as collateral.
The Fed auctioned $75 billion worth of Treasury securities. Bidders paid an interest rate of 0.330%. The Fed received bids of $86.1 billion worth of the securities. The identity of bidders is not released.
It was the first time the Fed conducted an auction of this kind. The next one is set for April 3.
Concerns linger over financial conditions. Demand for Treasury securities at the auction was less than some analysts expected, although that was viewed as a possible sign of less stress in the financial system freecreditreport. Still, many remain wary about financial conditions.
"It seems like the TSLF passed its first test," said T.J. Marta, a fixed-income strategist at RBC Capital Markets. "On the one hand I’m fairly positive about the auction. But on the other hand, we survived today… there is a whole lot more pain to come," in terms of more financial losses from the housing and credit debacles, he predicted.
The auction program is intended to help financial institutions and the troubled mortgage market. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions that started Thursday.
The goal is to make investment houses more inclined to lend to each other. It also is aimed at providing relief to the distressed market for mortgage-linked securities. Questions about their value and dumping of these securities have driven up mortgage rates, aggravating the housing crisis. Since the Fed’s announcement of this new program, rates on some mortgages have eased somewhat.
Kroszner: Curbing shady lending will restore faith. Federal Reserve Governor Randall Kroszner said in a speech Thursday that curbing shady lending practices that contributed to the housing and credit debacles should help revive the confidence of the public and investors.
"Effective consumer protection can help to restore confidence in the mortgage markets and help to preserve the flow of capital to consumers who wish to purchase a home," Kroszner said.
Under fire from Congress for being too lax in its oversight, the Fed has proposed a way to protect homeowners from dubious lending practices. Subprime borrowers - those with tarnished credit histories or low incomes - have been hurt the most, although problems have spread to more creditworthy borrowers.
The Fed wants to:
French consumer confidence fell to a record low, the budget deficit exceeded government estimates and retail sales growth slowed, as accelerating inflation took its toll on the euro region's second-largest economy.
Insee, the national statistics agency, said today its gauge of consumer confidence slipped in March to minus 36, the lowest since it was introduced in 1987. The institute also said the budget shortfall widened to 2.7 percent of gross domestic product last year from 2.4 percent in 2006.
The reports underscore deteriorating public finances and the effect of a U.S. economic slump and global credit squeeze on France, which takes over the rotating European Union presidency in the second half. Finance Minister Christine Lagarde this week cut her 2008 growth forecast to as low as 1.7 percent, compared with an earlier prediction of “close to 2 percent.''
“France is going into the EU presidency with one of the worse growth rates in the euro zone, a public deficit that will be beyond'' the EU ceiling of 3 percent of GDP and debt that breaches EU rules, said Marc Touati, chief economist at Global Equities in Paris.
Insee today confirmed 2007 GDP growth was 1.9 percent last year, down from 2.2 percent in 2006, as the euro and crude oil costs headed toward records. Still, the fourth-quarter's 0.4 percent expansion exceeded an estimate last month of 0.3 percent and the number of jobseekers fell last month.
`Reasonably Healthy'
“There will be some slowdown because of the rising euro and slowing global demand but the economy seems to be reasonably healthy,'' said Dario Perkins, an economist at ABN Amro Holding NV in London. “Although headline inflation isn't very high, people's perception is clearly much worse.''
The fastest inflation in 12 years is squeezing consumers' purchasing power, hurting consumers' confidence, which has been deteriorating since July pay day loan. Retail sales growth slowed in March, with the Bloomberg purchasing managers index falling today to a seasonally adjusted 53.3 from February's 58.8. A reading above 50 indicates expansion.
Voters' worries about the cost of living contributed to President Nicolas Sarkozy's loss in local elections to the Socialist party earlier this month.
More than 80 percent of French people said they saw their purchasing power decline in the last 12 months, according to a poll last month by Paris-based Ifop institute. That was up from 65 percent in November and from 59 percent in January 2007.
That contrasts with Insee's data today showing that household buying power climbed 3.3 percent last year, more than the 2.4 percent of 2006.
“With confidence at a historic low, it's hard to believe that consumer spending won't be affected at all,'' said Nicolas Bouzou, chief executive of research institute Asteres in Paris. “There's a risk for an increase in savings over the next month, which would rein in spending and borrowing.''
The savings' ratio also rose to 16.3 percent from 15.4 percent in 2006, Insee reported today.
In the fourth quarter, companies' profit margins narrowed to 37.5 percent from 37.1 percent, Insee said. Over 2007, it slipped to 37.3 percent from 37.7 percent.
Anticipating a surge in troubled financial institutions, federal regulators will increase by 60% the number of workers who handle bank failures.
The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency’s chief operating officer, said Tuesday.
"We want to make sure that we’re prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.
There have been five bank failures since February 2007 following an uneventful more than two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.
Analysts see casualties rising, but don’t believe they will reach early-1990s levels.
Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 U.S. bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.
To cushion against losses from bad loans, banks likely will raise additional capital and cut dividends this year, said Tony Davis, a senior bank analyst with Stifel Nicolaus & Co. Inc. However, he said, "we’re not looking at a massive number of bank failures."
The FDIC provides insurance for deposits up to $100,000. While depositors typically have quick access to their bank accounts on the next business day after a bank closure, winding down a failed bank’s operations can take years to finish payday loan cash advance loan. That process can include selling off real estate, investments and dealing with lawsuits.
There are 76 banks on the FDIC’s "problem institutions" list, which would equate to about 10 expected bank failures this year, though FDIC officials declined to make projections. Historically, about six banks fail per year on average, FDIC officials said.
Since 1981, total failures per year averaged about 13% of the number of institutions that started the year on the agency’s list of banks with weak financial conditions.
There have been two failures in 2008 — both of which were small Missouri-based banks. By far the largest recent failure was the September 2007 shutdown of Georgia-based NetBank Inc., an online bank with $2.5 billion in assets. NetBank’s insured deposits — representing more than 100,000 customers — were assumed by ING Bank, part of Dutch financial giant ING Groep NV.
The FDIC’s chairman, Sheila Bair, has said that banks that were cautious about their lending should be able to weather the economic downturn, but cautioned that those that weren’t so careful won’t be so lucky. Analysts warn of lurking weaknesses, especially in smaller banks with a high concentration of real estate construction loans.
The slumping economy is hurting Americans where it hurts the most: daily necessities like food and drugs.
A national CNN/Opinion Research Corp. poll released Thursday found that 30% of respondents are trimming their spending on food and medicine and that 57% are worried they will have to cut back soon. Nearly half said they have cut back on how much heating or electricity they use in their homes, and 53% are concerned that they will have to trim spending on heating in the future.
"Consumers are definitely feeling a pinch on rising prices of staple products like food," said Wachovia economist Adam York. "There are some consumers that are having some real trouble in this environment"
Shifting spending habits. Rising prices and declining home values have left Americans strapped for cash. Of the more than 1,000 American adults surveyed in the poll, conducted March 14-16, 31% have curtailed their spending on utilities. Further, 59% said they have cut back on clothing purchases. As economists expect to happen in a downturn, 75% have spent less on leisure activities, and 61% have postponed major purchases such as furniture or appliances.
Consumers have shifted their spending from discretionary items like electronics and vacations in order to continue paying for food and drugs.
According to York, discretionary spending has reached an historic low, not seen at these levels since the early 1980s. A U.S. Commerce Department study has shown retail spending slipped 0.6% last month.
"Core spending has mainly remained high," said York.
Nothing left to trim bad credit payday loans. But that may now be changing.
For instance, a recent Commerce Department report shows that consumers’ food and beverage spending dropped 0.2% in February from the previous month and grocery store sales fell 0.3%.
"Instead of buying steak, they’re buying chicken," said York. "People are buying generics and reducing spending by shifting to cheaper alternatives."
Many American expect that they will need to cut back on discretionary items when times are tough, but trimming spending on necessities is a concern. Although 23% said they are "very worried" about cutting back on utilities" and 25% said the same about reducing clothing purchases, 36% said they are "very worried" about cutting back on daily necessities and 34% said the same about heating their homes.
Help is on the way. But consumers may not feel the pinch for much longer.
Tax rebate checks are on their way, which the government expects will help boost the economy. Though they may only show temporary relief, many economists expect to see a jump in consumer spending this summer.
"The rebate checks alone won’t get us out of a recession, but as a result of the government’s monetary policies, consumer spending should increase in the third quarter," said York.
Maria Gomez knows firsthand the devastation that can hit families that lack health insurance.
Gomez is chief executive of Mary’s Center for Maternal and Child Care in the District of Columbia. The clinic serves Latinos who either have no insurance or are underinsured.
The fact that 47 million people in this country — including 9 million children — are uninsured has been one of the top issues in the current presidential campaign.
Equally troubling is this statistic: The lack of health care coverage is most acute among Hispanics and African-Americans, many of whom work in low-wage jobs without benefits or are employed by small businesses that don’t offer coverage.
"Things are getting worse," Gomez said. "What we are seeing is a lot of people coming in who cannot qualify for government programs."
These families earn too much to qualify for free care but don’t make enough to pay for insurance, she said.
Thirty-six percent of Hispanics are uninsured, compared with 22 percent of African-Americans, 17 percent of Asian/Pacific Islanders, and 13 percent of whites, according to the Kaiser Family Foundation’s most recent analysis.
If you have adequate health insurance and are inclined to think this issue doesn’t affect you, let me assure you that it does. The cost of insurance for those with coverage is escalating in part because the number of uninsured Americans keeps rising, said Ron Pollack, executive director of Families USA, a nonprofit, national organization that advocates for high-quality, affordable health care for all Americans.
Using data from the Census Bureau, the federal Agency for Healthcare Research and Quality, and the National Center for Health Statistics, Families USA determined that the unpaid expenses for the uninsured added an average of $922 in 2005 to the premiums for employer-provided family health insurance http://payday-faxless.com. That extra cost could rise to $1,502 in 2010, the group found.
If you have insurance, you know how the costs hit your wallet. Increasingly, employers are shifting a larger portion of their premiums to employees. You may be able to afford your policy today but it’s possible you may not in the future.
Premiums for employer-sponsored health insurance rose an average of 6.1 percent in 2007, according to the Kaiser Family Foundation and the Health Research and Educational Trust. Since 2001, premiums for family coverage have increased 78 percent.
It may be easy to dismiss the uninsured, especially minority families. But these people are the workers and caregivers who provide needed services.
"This is a problem for all of us. Eighty percent of people who are uninsured are working and some at more than one job. They deserve to have health care coverage," said Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation.
The foundation sponsors "Cover the Uninsured Week" (www.covertheuninsured.org), a campaign that runs this year from April 27 to May 3. The campaign highlights the plight of the uninsured.
singletarym@washpost.com
2008, WASHINGTON POST WRITERS GROUP
South Korea's Finance Minister Kang Man Soo said measures to damp demand won't work to contain inflation stemming from higher costs, indicating the government may increase pressure on the bank not to raise interest rates.
“The current price increases seem to be coming from rising costs,'' Kang said before a meeting today in Gwacheon, according to his spokesman Kim Kyu Ok. “There's a limit to controlling inflation by suppressing aggregate demand and money supply.''
Bond prices gained on speculation the finance ministry will pressure the Bank of Korea to keep interest rates on hold, or even cut them, to spur economic growth. South Korea's President Lee Myung Bak won an election this year on a pledge to speed economic growth to 6 percent from 5 percent last year. Lee has the right to appoint three of the Bank of Korea's seven members in April when their four-year terms end.
“Kang's comments were a big boost to sentiment in the bond market as people took them to mean that it's going to be difficult for the central bank to raise interest rates,'' said Seo Chul Soo, a fixed income strategist with Daewoo Securities Co. in Seoul.
The yield on the benchmark five-year note due March 2013 fell 13 basis points to 5.15 percent at 1:48 p.m. in Seoul. South Korea's consumer price index increased 3.6 percent from a year earlier in February after surging at the fastest pace in more than three years in January check cash advance.
South Korea's central bank kept its interest-rate policy unchanged for a seventh month on March 7, saying inflation pressures have increased while the global economic outlook had deteriorated.
Oil, Grain Costs
At the time, central bank Governor Lee Seong Tae said oil and grain costs were driving up inflation more than forecast, damping speculation the bank would cut rates as soon as next month.
“Whether the Bank of Korea will follow the market's expectation for a rate cut without any surprise, it really depends on how inflation and the economy'' evolve, Governor Lee said March 7.
Six of 10 economists surveyed before the March 7 decision forecast the Bank of Korea will reduce interest rates by mid-year.
The government has said it will cut taxes and ease regulations to try to achieve economic growth of 6 percent this year. The ministry said yesterday it will temporarily remove tariffs on 70 items of grains, oil and other raw materials in an effort to curb inflation.
Rising oil prices push up costs for companies as well as South Korea's import bill. The price of Dubai crude oil, South Korea's benchmark, jumped 65 percent since the beginning of last year. South Korea purchases 97 percent of its energy needs from overseas.
The government nominated a former Finance Ministry bureaucrat to head the central bank Tuesday, raising the likelihood its second choice will be rejected by the opposition a day before the current governor’s term ends.
The government proposed Koji Tanami, now governor of Japan Bank for International Cooperation, according to a parliamentary official who spoke on customary condition anonymity.
But a senior opposition legislator said he was opposed to the nomination of Tanami, 68, also a former vice finance minister.
"It would be hard to find any reasons to support him," opposition lawmaker Kenji Yamaoka said on nationally televised news.
The opposition has been urging the government to pick someone not politically connected to the nation’s powerful bureaucracy to ensure the independence of the Bank of Japan. The opposition, led by the Democratic Party of Japan, rejected the government’s first pick, Bank of Japan Deputy Governor Toshiro Muto, because he was a former Finance Ministry bureaucrat.
The confrontation has brewed for weeks, and Japan’s inability to come up with a new central bank governor has been a major embarrassment. The world’s second largest economy is in danger of slipping into a recession after six years of moderate growth, battered by the plunging dollar, volatile stock markets and soaring oil prices.
In a hearing on his candidacy in the lower house, Tanami vowed to uphold the independence of the Bank of Japan.
"The independence of the Bank of Japan policies must be ensured to win the trust of the people," he told legislators. His remarks were fed live on a monitor for reporters.
He stressed that a careful analysis of the downside risks to global growth, including rising energy prices and the U.S. credit crisis, are needed to make appropriate monetary policy decisions.
He said the Japanese economy’s growth had slowed but was continuing, despite the risks.
The term of Bank of Japan Governor Toshihiko Fukui ends Wednesday low rates payday advance. The opposition, which controls the upper house, blocked Muto’s appointment in a parliamentary vote last week.
Preliminary talks Monday between the ruling coalition, led by the Liberal Democratic Party, and the opposition, mainly the Democratic Party of Japan, failed to reach a compromise.
The ruling party coalition controls the more powerful lower house. The BOJ chief nomination needs approval from both houses of parliament.
Japanese media reports say the idea of keeping Fukui in office was proposed informally. That option was dismissed by the opposition, which has a chance at possible political leadership for the first time in decades and is angry that the government has rammed through some bills that require approval from only the lower house.
Tanami joined the Finance Ministry in 1964. In October, he became the head of JBIC, a government financial institution that handles lending and other operations to promote Japanese trade and growth.
If an agreement is not reached in time for Fukui’s departure, former BOJ Executive Director Masaaki Shirakawa - whose nomination as a BOJ deputy governor was approved last week - could step in as interim bank chief.
The government named as the other deputy Kiyohiko Nishimura, former University of Tokyo professor and now a member of the BOJ policy board.
"We have always said that we are opposed to having a vacuum," in the post of Bank of Japan governor, chief government spokesman Nobutaka Machimura told reporters. "We believe our (new) proposal will be accepted."
The Bank of England offered extra cash to banks in the first short-term emergency operation for six months, joining the U.S. Federal Reserve in an attempt to prevent a financial-market meltdown.
“This action is being taken in response to conditions in the short-term money markets this morning,'' the U.K. central bank said in a statement today in London. “The bank will take actions to ensure that the overnight rate is close to bank rate. Along with other central banks, the Bank of England is closely monitoring market conditions.''
The U.K. central bank's move follows the Fed's reduction of the discount rate yesterday, the first weekend action of its kind in more than three decades. The U.S. authorities' rescue of Bear Stearns Cos., Wall Street's fifth-largest securities firm, sent the dollar to record lows against the euro and Swiss franc and world equity markets tumbling.
“Clearly we're very much still in the throes of this process,'' said Richard McGuire, an economist at Royal Bank of Canada in London. “The risks to the downside are mounting. While the rest of the world is clearly implicated, it's still primarily a U.S. problem. The U.K. is under threat.''
The Bank of England offered 5 billion pounds ($10 billion) of three-day reserves in an “exceptional'' fine-tuning operation. The bank received bids for 23.6 billion pounds of funds, almost five times more than the amount it awarded, the bank said in a statement.
`Close Contact'
“As you would expect, the Tripartite authority, that is the Bank of England, the Treasury and the Financial Services Authority, have been in close contact with their U.S. counterparts over the weekend and continue to closely monitor the markets,'' Michael Ellam, a spokesman for Prime Minister Gordon Brown, told journalists in London today.
Brown said in Parliament today that “we will at all times remain vigilant and will take whatever actions necessary in order to maintain economic stability and growth.''
The pound fell as much as 0.8 percent against the dollar after the bank announced the operation today. It traded at $2.0011 as of 4:12 p.m. in London. The dollar fell below 96 yen today for the first time in 12 years.
The Bank of England has lowered the benchmark interest rate twice since December to 5.25 percent to shield economic growth from the effects of a potential recession in the U.S http://payday-nofax.com. Banks have curtailed lending to one another, with the three-month inter- bank lending rate for pounds climbing to 5.96 percent today, the highest this year.
Rate Cut
“We suspect May'' will be the month of the next U.K. interest-rate cut, James Knightley, an economist at ING Financial Markets in London, said in an interview with Bloomberg Television. “But, given the latest financial market uncertainty, if we get some steep equity market falls, that actually could bring that forward.''
Amit Kara, an economist at UBS AG, brought forward his call for the next central bank rate reduction to April from May to reflect “events in the U.S. over the past three days,'' he said in a statement. He kept his forecast that the benchmark will fall 1 percentage point this year.
Today's Bank of England action provides funds equivalent to 25 percent of commercial banks' reserves targets, and the range around the targets remains at 30 percent, the bank said. It will keep the range under review, the statement said.
Bear Stearns
The Fed lowered the so-called discount rate by a quarter of a percentage point to 3.25 percent and also will lend to the 20 firms that buy Treasury securities directly from it. It will provide up to $30 billion to JPMorgan Chase & Co. to help it finance the purchase of Bear Stearns.
Global stock markets have lost $2.4 trillion in market value from a peak in October to $60 trillion as of March 14, partly reflecting the slump in the U.S. dollar, which has boosted the value of European and Asian equities.
In a report today, the Bank of England said information from contacts and financial market prices in February signaled “difficult conditions'' may continue for some time, threatening to slow economic growth.
“This could act as a drag on economic activity and in turn prompt further deterioration in the quality of banks' assets and limit their ability and willingness to lend,'' the central bank said in its quarterly bulletin released today in London.
The U.S. Federal Reserve is poised to cut interest rates again this week while the European Central Bank remains on hold for a while, leaving the beleaguered U.S. dollar caught in the cross-fire.
The slumping U.S. currency has contributed to oil’s climb to $111 per barrel. It is part of the reason behind investors’ mad dash to buy other commodities, ranging from wheat to gold. The slide is also feeding malaise among European exporters struggling to compete with cheaper U.S. goods, and prompting some big oil exporters who pegged their own currency to the dollar to rethink that policy.
While calls have intensified for official government intervention to stem the dollar’s decline, Washington has shown no inclination to act. Finance leaders in Europe and Japan ratcheted up the rhetoric last week as the dollar hit an all-time low against the euro, and sank below 100 yen for the first time in more than a decade. So far, it remains all talk.
Only the Bank of Israel stepped in last week with official action, twice buying foreign currency to cool the shekel, which had hit an 11-year peak against the dollar.
Goldman Sachs strategists called the Bank of Israel’s moves “a sign that the pace of dollar decline is becoming more uncomfortable in places.”
That discomfort is apparent in recent comments from world leaders no teletrack payday loans. British Prime Minister Gordon Brown said volatility in currency rates “obviously worries people.” European Union leaders repeated their view that excessive currency moves are “undesirable,” although Eurogroup Chairman Jean-Claude Juncker said on Friday they did not discuss any intervention.
In Japan, Chief Cabinet Secretary Nobutaka Machimura said the yen’s moves seemed to reflect dollar weakness rather than yen strength. “As for currency intervention, I will not comment,” he said at a news conference on Friday.
U.S. President George W. Bush acknowledged last week that the weakening dollar was contributing to oil’s steep upward march. But Treasury Secretary Henry Paulson, the main spokesman for the U.S. currency, stuck to his well-worn script, saying a strong dollar was in the nation’s best interest, and healthy long-term U.S. fundamentals would be reflected in exchange rates.
The sales rate of prescription medications slowed by more than half in 2007 to levels not seen since the early 1960s, according to a report released Wednesday.
The report from IMS Health said the prescription market grew 3.8% in 2007 to $286.5 billion, from a growth rate of 8% in the previous year.
"The U.S. pharmaceutical market experienced its lowest growth rate since 1961," said IMS Senior Vice President Murray Aitken in the report.
According to the report, sales slowed across the board from branded medications to generics, attributed to fewer new products, narrowing Medicare sales and rising safety concerns.
The total number of drugs prescribed grew 2.8% in 2007, led by antidepressants, down from 4.6% growth rate in 2006, according to IMS. The top five selling drug categories in 2007 were antidepressants, lipid regulators, combination pain medications, ace inhibitors and beta blockers.
The number of generic drugs sold rose 10%, partially offsetting $17 billion in the sales of name-brand drugs that had lost exclusivity, said the report.
Brand-name drug makers can take a huge profit hit from generic competition. In February, drug maker Cephalon (CEPH) took heat from the Federal Trade Commission after it paid more than $200 million to four generic drug makers to keep them from developing products that would compete with its profitable narcolepsy medication. And drug maker Pfizer (PFE, Fortune 500) has been scrambling for something to replace its blockbuster cholesterol drug Lipitor, which brings in $12 billion plus sales each year, before low-cost generic drug makers can begin eating away sales in 2010.
A maturing Medicare drug program is also to blame for lower sales, said IMS same day payday loans. Prescriptions sold though Medicare accounted for 19% of total retail prescriptions, according to the report, and 65% of U.S. citizens over the age of 65 are enrolled.
"The moderating growth trend that began in 2001 resumed last year following the one-time impact on market growth in 2006 from the implementation of Medicare Part D," said Aitken. Medicare Part D is the government program’s prescription drug coverage benefit.
"We will see additional lower-cost treatment options for many patients, while new and innovative therapies are delivered to specific patient groups, such as those suffering with cancer. Safety issues will be closely monitored and are likely to bring added caution to the market over the next several years," he added.
IMS predicts $13 billion worth of brand name drugs will begin to compete with low-cost generics in 2008. However, the introduction of several new drugs will help offset that loss. The organization projected annual pharmaceutical sales growth to be between 3% and 6% through 2010.
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