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Copyright © 2007 by American Society of Health-System Pharmacists
Special Feature |
Projecting future drug expenditures—2007
JAMES M. HOFFMAN, PHARM.D., M.S., is Medication Outcomes Coordinator, Pharmaceutical Department, St. Jude Children’s Research Hospital, Memphis, TN, and Assistant Professor, Department of Clinical Pharmacy, College of Pharmacy, University of Tennessee, Memphis. NILAY D. SHAH, PH.D., B.S.PHARM., is Assistant Professor of Health Services Research, Division of Health Care Policy and Research, Mayo Clinic College of Medicine, Rochester, MN. LEE C. VERMEULEN, B.S.PHARM., M.S., FCCP, is Director, Center for Drug Policy, University of Wisconsin Hospital and Clinics, Madison, and Clinical Associate Professor, University of Wisconsin— Madison School of Pharmacy, Madison. GLEN T. SCHUMOCK, PHARM.D., M.B.A., FCCP, is Associate Professor and Director, Center for Pharmacoeconomic Research, College of Pharmacy, University of Illinois—Chicago, Chicago. PENNY GRIM, M.B.A., is Lead Business Analyst, Supplier Management; ROBERT J. HUNKLER, M.B.A., is Director, Professional Relations, and KARRIE M. HONTZ, M.B.A., is Senior Director, Business Development, IMS Health, Plymouth Meeting, PA.
Address correspondence to Mr. Vermeulen at the University of Wisconsin Hospital and Clinics, 600 Highland Avenue, M/C 9475, Madison, WI 53792 (lc.vermeulen{at}hosp.wisc.edu).
Summary. Various factors are likely to affect drug costs, including drug prices, drugs in development, and generic drugs. In 2005, there was a continued moderation of the increase in drug expenditures. Total prescription drug expenditures increased by 5.5% from 2004 to 2005, with total spending rising from $239 billion to $252 billion. Through the first nine months of 2006, hospital drug expenditures increased by only 3% compared with 2005. This moderation of the growth of prescription drug expenditures can be attributed to three major factors: availability of major prescription drugs in generic form, continued increase in cost sharing for employees in employer-sponsored health plans, and decreased use due to safety concerns. It is expected that expenditures in 2007 will be influenced by similar factors, with few costly new products reaching the market, increased concern over product safety reducing the use of older agents and slowing the diffusion of newer agents that do reach the market, and several important patent expirations, leading to slower growth in expenditures.
Conclusion. In 2007, we project a 5–7% increase in drug expenditures in outpatient settings, a 14–16% increase in clinics, and a 4–6% increase in hospitals.
Index terms: Costs; Drug use; Drugs; Economics; Health-benefit programs; Patents; Prescriptions; Pricing; Product development; Toxicity
Purpose. Drug expenditure trends in 2005 and 2006, projected drug expenditures for 2007, and factors likely to influence drug costs are discussed.
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