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Increased Drug Costs Due To Utilization, Not Price

Tue, 05/30/2000 - 11:00pm — Karen Stevenson
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Merck-Medco's Drug Trend 2000 Report, entitled "Managing Pharmacy Benefit Costs -- New Insights for a New Century," says that pharmacy benefit costs are rising largely because of higher utilization, with more people taking prescription medicines and patients taking medicines for a longer period of time. Another factor in cost increases is that newer, costlier drugs are replacing older therapies. Their report found that price inflation has had a relatively minor effect on overall drug costs.

Drug costs on a per-member basis have more than doubled in the period from 1995 to 1999, the report notes. Of that increase:

- 30% of the growth was due to new users -- people not previously using prescription drugs who began treatment with a new drug therapy. - 34% was due to more days of therapy per user -- people using drugs did so for a greater number of days per year. - 36% was due to an increase in drug costs per day of therapy -- new drugs, on average, were more expensive than the drugs they replaced.

The report suggested that increased use of generic drugs and mail-service pharmacies can significantly control costs while improving the quality of prescription drug care.

Merck-Medco's Drug Trend 2000 Report, entitled "Managing Pharmacy Benefit Costs -- New Insights for a New Century," says that pharmacy benefit costs are rising largely because of higher utilization, with more people taking prescription medicines and patients taking medicines for a longer period of time. Another factor in cost increases is that newer, costlier drugs are replacing older therapies. Their report found that price inflation has had a relatively minor effect on overall drug costs.

Drug costs on a per-member basis have more than doubled in the period from 1995 to 1999, the report notes. Of that increase:

- 30% of the growth was due to new users -- people not previously using prescription drugs who began treatment with a new drug therapy. - 34% was due to more days of therapy per user -- people using drugs did so for a greater number of days per year. - 36% was due to an increase in drug costs per day of therapy -- new drugs, on average, were more expensive than the drugs they replaced.

The report suggested that increased use of generic drugs and mail-service pharmacies can significantly control costs while improving the quality of prescription drug care.