Workforce.com

Prescription Drug Spending Isn’t What It Used to Be

December 6, 2004
Spending on prescription drugs increased 8.8 percent during the first half of this year--a seemingly high rate of growth, but way below 1999 levels.

A new report from the Center for Studying Health System Change shows that the rate of increase in drug spending has moderated slightly. The study was funded by the Employee Benefit Research Institute.

From the beginning of 1998 through the end of 2002, drug spending rose each half-year by as much as 19.5 percent and never by less than 12.4 percent. Since that time, employers have increased copayments for employees, and some have asked employees to pay a percentage of their prescription costs, rather than a fixed amount. This cost-shifting--and the increased use of generics--has helped limit the growth of drug spending.

Hospital prices rose 7.7 percent during the first half of 2004. According to the Center for Studying Health System Change, "The large increase in prices is due in part to strong growth in wage rates for hospital workers, which have been driven up by a persistent worker shortage, particularly for nurses."

More on health care--including articles on prescription drugs, wellness and costs--is available online.