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The Business of
Health Care Report Americans are not only using more prescription drugs, they're also using new, more expensive ones. The result: prescription drug costs are increasing at three times the rate of other health care costs. According to a recent study by the Kaiser Family Foundation, spending on prescription drugs accounted for 40 percent of cost increases in medical claims last year. The cost of prescriptions rose by 19 percent from 1999 to 2000. Managed care insurance plans like HMOs and PPOs had the biggest increases in prescription costs at 35 percent, compared to a 17 percent increase for traditional insurance plans. In general, managed care plans with drug formularies have been less likely to pay for drugs new to the market. They encourage doctors to prescribe older, less expensive drugs. But HMO providers, facing incentives to hold down costs, also have been more likely to manage an illness using drugs rather than other therapies that might require inpatient and outpatient care. The Pharmaceutical Research and Manufacturers of America estimates the average cost of bringing one new drug to market is $500 million. It takes an average of 12 to 15 years to discover and develop a new medicine. Most of that time is spent testing the drug to make sure it is safe. In many markets, drug costs will soon surpass doctors' fees as the second biggest component of health insurance premiums. Faced with another year of potential double-digit premium increases, employers are looking for approaches to controlling prescription drug costs. 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: Pharmaceutical Research and Manufacturers of America; Kaiser Family Foundation Stay tuned to our weekly Business of Health Care reports here on TexasHealth.org and on News Radio 1080 KRLD. ©
2001 Texas Health Resources |
