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The Business of
Health Care Report Last year, citizens of the U.S. spent $132 billion on prescription drugs, double the amount spent in 1990. By the year 2010, 16 percent of personal health spending is expected to be for prescription medicines. Annual usage of prescriptions was up 32 percent between 1992 and 1998 - to 10 prescriptions per person. More than 80 percent of the cost increase was due to greater use of drugs and a shift to newer medicines, not to the rising cost of existing drugs. So it's no wonder that employers and insurers are paying more attention to prescription costs. The most frequent answer has been for employers and insurers to implement drug formularies-a list of approved drugs for certain diagnoses based on a medical panel's opinions on effectiveness of the drug and its lower cost. Fifty-eight percent of employers use a formulary, according to a study by the Society of Certified Employee Benefit Specialists. The first tier is usually generic drugs with the lowest co-pay. The goal is to get as many physicians as possible to prescribe the lower cost drugs. The second tier usually is brand name drugs, with a higher co-pay or percentage of the cost. And the final tier is for drugs not on the formulary, where employees get a smaller cost break. Humana recently announced a fourth-tier in its formulary for high technology, self-injectable and gene-therapy drugs with an annual cap of $2,500. Since drug benefit costs are projected to continue rising at an annual rate of 15 percent, we're sure to be talking more about creative ways companies are keeping reins on this important employee benefit. If you have comments on health care or suggestions for topics to be addressed on this program, e-mail me at DougHawthorne@TexasHealth.org. Sources: Advisory Board Daily Briefing, Business and Health February 2001, Managed Care Department Stay tuned to our weekly Business of Health Care reports here on TexasHealth.org and on News Radio 1080 KRLD. ©
2001 Texas Health Resources |
