A remedy for rising drug costs: Health insurers can mitigate the ever-increasing cost of prescription drugs with careful attention to business. (Life/Health).Prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, spending continues to grow at a faster pace than any other component of health care in the United States Health care in the United States is provided by many separate legal entities. The U.S. spends more on health care, both as a proportion of gross domestic product (GDP) and on a per-capita basis, than any other nation in the world. Current estimates put U.S. , and it is expected to continue for at least the next several years. While health insurance companies have always monitored drug spending, it's become even more important to monitor and predict the impact of drug costs in relation to other higher health-care costs. Ultimately, the key to keeping costs down and competitive is to be proactive in plan designs and clinical program offerings. Educating members about using the appropriate drug at the appropriate time and being fully engaged in how buying decisions impact future drug costs will make a big difference.
Drivers of Increased Costs
There are two primary reasons drug spending has increased: higher use and a higher average cost per prescription. Our research indicates that each year, drug spending will account for 18% to 25% of overall healthcare spending. Prescription drug costs have increased from less than 10% of total health-care costs to 15%-plus of the total health-care bill--and could approach 20% of total health-care costs in the future. There are several key drivers of these cost increases:
* There will be a significant increase in the elderly population over the next decade. People tend to use more drugs as they grow older to treat chronic conditions and, on average, tend to use drugs that cost more.
* We continue to see more drugs released, with additional drugs in clinical trials. In 2000, the Food and Drug Administration approved 27 new molecular entities plus many enhanced versions of existing drugs. Right now, more than 1,000 drugs are in the pipeline.
* AdvancePCS, a pharmacy benefits manager, analyzed the top 100 drugs by spending in 2000 compared to 1999. The average increase in ingredient cost per prescription was 12.9%, and the average price increase per prescription was 6.7%. The increases in generics were higher than the increases in brand-name drugs Noun 1. brand-name drug - a drug that has a trade name and is protected by a patent (can be produced and sold only by the company holding the patent)
drug - a substance that is used as a medicine or narcotic .
* Drug companies have invested heavily in advertising directly to consumers for the latest allergy allergy, hypersensitive reaction of the body tissues of certain individuals to certain substances that, in similar amounts and circumstances, are innocuous to other persons. Allergens, or allergy-causing substances, can be airborne substances (e.g. , migraine migraine (mī`grān), headache characterized by recurrent attacks of severe pain, usually on one side of the head. It may be preceded by flashes or spots before the eyes or a ringing in the ears, and accompanied by double vision, nausea, , arthritis or pain medication, to name a few. What we have in the end is a nation of consumers entering their doctors' offices with a drug in mind that they think will cure their ailment ail·ment
A physical or mental disorder, especially a mild illness. .
* The thresholds for determining diabetes and high cholesterol Cholesterol, High Definition
Cholesterol is a fatty substance found in animal tissue and is an important component to the human body. It is manufactured in the liver and carried throughout the body in the bloodstream. were lowered within the last two years. As a result, more than 38 million additional people fell under he guidelines guidelines,
n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. for treatment. While this should have a long-term, positive impact on patients' health, the short-term impact on drug spending is significant.
1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).
2. The process of issuing insurance policies. Implications
Projecting a drug trend is even more difficult in an economic downturn. Why? As employers downsize Downsize
Reducing the size of a company by eliminating workers and/or divisions within the company.
When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability.
It is sometimes referred to as trimming the fat. , the impact will be a notable increase in the use of medications related to mental and physical stress relief. The result is an increase in drug spending.
A key part of managing health-care costs is for members to be financially engaged in buying decisions. For prescription drugs, this means higher copays and plan designs that encourage the use of generic alternatives and preferred brands that result in a lower net cost. By integrating medical and drug data, members can be identified who are candidates for disease-management or case-management interventions.
There are some positive effects to this trend to consider:
* Many key drugs will lose their patent protection in the next couple of years, providing an opportunity to switch patients to generics. While the initial cost of the generic alternatives for some of these drugs may be expensive, it does provide for a more competitive environment.
* Many of the drugs being introduced will improve the health of patients. Patients who continue to comply with drug therapies will improve their health for the long term.
* The Human Genome The human genome is the genome of Homo sapiens, which is composed of 24 distinct pairs of chromosomes (22 autosomal + X + Y) with a total of approximately 3 billion DNA base pairs containing an estimated 20,000–25,000 genes. Project will have a profound effect on health care. Biotech bi·o·tech
short for biotechnology
Noun 1. companies are working to develop new diagnostic tools based on genomics. Some day, we could have new generations of drugs to increase immunity to some diseases and new versions of drugs that better treat specific types of gene combinations. We're years away from the reality of this impact, so trend projections do not include these factors, but some day, they will have a significant impact on costs.
Ultimately, plan design and management programs will need to be continually re-evaluated to determine if/when changes should take place to reduce the impact of cost increases. A focused strategy for health care with specific emphasis on prescription drugs will allow us to better predict future costs.
Gary Cain, a Best's Review columnist, is senior vice president, Group Life and Health, at the Principal Financial Group, Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation).
Des Moines (pronounced /dɪˈmɔɪn/ in English, .