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Drug Spending Rises Least in 10 Years

Posted on: Thursday, 8 June 2006, 09:00 CDT

By Mary Jo Feldstein, St. Louis Post-Dispatch

Jun. 7--Prescription drug spending rose 9 percent last year, the smallest increase in a decade, according to a study released today by Express Scripts Inc., of Maryland Heights.

Express Scripts, the nation's third-largest pharmacy benefits manager, credited greater use of generics and concerns about the safety of some drugs such as Vioxx for the smaller increase.

"This is actually the first time in a decade it's been in the single digits," said Steve Miller, chief medical officer at Curascript speciality pharmacy, an Express Scripts subsidiary. "This is a remarkable feat."

The survey, based on data gleaned from Express Scripts members, is used to approximate prescription drug usage nationally. The research supports previous studies showing that increases in prescription drug costs are slowing, while increases in other health care expenses such as physician and hospital fees continue to climb.

The rising cost of health care has been a key workplace issue for years as workers and their employers grapple with the increases. Companies in many cases have passed on at least some of the cost hikes to employees.

Increases in prescription drug spending hit a high of 20 percent in 1999, but fell to nearly half that by 2003, the most recent year available, according to the Centers for Medicare and Medicaid data.

The study breaks down prescription drug spending by categories: the inflationary increase in existing drugs, the increase in prescriptions written, the level of generic and specialty drugs prescribed, and spending on new drugs.

Specialty drugs -- high-cost, often injectable medications that require close monitoring -- are the fastest-growing segment of pharmaceutical spending. As the usage and price of many drugs are beginning to stabilize, specialty drugs are continuing to drive prices up.

Though only about 3 percent of Americans take specialty drugs, spending on them is growing at twice the rate of traditional drugs. By 2008, about a quarter of all money spent on outpatient medications will be spent on specialty drugs.

Without the impact of specialty drugs, spending would have increased 7.9 percent in 2005. Of that 7.9 percent, 52.5 percent was attributable to the number of medications prescribed, 42.5 percent was inflationary, and 5 percent was from the introduction of new medications.

Express Scripts expects the smaller increases will continue throughout the decade as more generics come on the market and fewer expensive "blockbuster" drugs are introduced.

Blockbuster drugs are those with sales of at least $1 billion. They're typically brand-name medications used to treat chronic conditions such as high blood pressure or cholesterol. Though many new blockbuster medications have come to the market in recent years, Miller said the flow appears to be slowing and physicians are starting to use generics more for managing chronic conditions.

At the same time, some patients are requesting moves to generics because of safety concerns over Vioxx and other medications. Vioxx, an arthritis medication, was pulled from the market in September 2004 after a study suggested it doubled the risk of heart attack and stroke. Fear also drove down demand for similar medications, such as Celebrex and Bextra.

"Physicians are increasingly worried about drug safety, and so are consumers, for that matter," said Robert Epstein, chief medical officer for Medco Health Solutions, the nation's largest pharmacy benefits manager.

Medco, of Nashville, Tenn., conducts its own study of drug prices each year and found trends similar to those of Express Scripts.

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Copyright (c) 2006, St. Louis Post-Dispatch

Distributed by Knight Ridder/Tribune Business News.

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Source: St. Louis Post-Dispatch

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