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Drug Spending Up in '99, Will Continue to Rise

Kate Traynor

Average prescription-drug costs for clients of one major pharmacy benefit management company (PBM) rose to $387 per year per plan member in 1999, a 17.4 percent increase over the previous year. By 2004, prescription drug costs could increase to $790 per member.

These findings, presented in the Express Scripts 1999 Drug Trend Report, reflect prescription-drug purchases by nearly 10 million people a month. The analysis of the PBM's database excluded drugs dispensed to Medicaid and Medicare+Choice beneficiaries, in inpatient settings including hospitals, and through discount programs. 

Express Scripts reported that the average prescription price increased 9.6 percent in 1999, accounting for nearly a third of clients' increased spending on prescriptions. The introduction of newer, more expensive drugs helped fuel price increases, as did the use of older drugs for new indications. 

More prescriptions were filled last year, too. Use of the 50 most common drugs increased 6.2 percent over 1998. 

The average consumer served by the PBM used 8.2 prescriptions in 1999. According to the company, commercial health plan subscribers 65 years and older averaged 29 prescriptions apiece in 1999, while younger plan participants used seven prescriptions. For this analysis, each drug purchase at a pharmacy counted as a separate prescription, with mail-order purchases adjusted to one month's supply per prescription. 

At $1,185 per year, the average drug expenditure for seniors greatly exceeded the amount for people younger than 65—$265. 

What drugs are people using most? According to Express Scripts, antihypertensives and antidepressants are the most frequently used drugs, accounting for nearly an eighth of drug purchases. 

Though prescribed less often than antihypertensives and antidepressants, nonsedating and low-sedating antihistamines increased at the highest rate, 18.4 percent, of all drug classes studied by the PBM. According to IMS Health and Competitive Media Reporting, this increase coincided with over $224 million in direct-to-consumer advertising of these drugs by their manufacturers. 

The use of lipid-lowering drugs rose 18.1 percent, with Lipitor, a Warner-Lambert Company product, becoming the most frequently prescribed drug in this class. 

Express Scripts predicted that drug price inflation will continue through 2004, but the actual inflation rate will decrease to 12.1 percent in 2004. Political pressure for a Medicare outpatient prescription drug benefit is expected to slow the inflation rate, as will concerns about discrepant drug pricing in the United States versus other countries. 

Express Scripts Chief Executive Officer Barrett Toan offered his views on the report's findings during a June 28 Webcast, "The Future of the Pharmacy Benefit," at the company's Outcomes Conference in St. Louis. 

Toan predicted that double-digit inflation of drug costs will continue, driven by new therapies and new indications for existing drugs. He also pointed to the Human Genome Project's generation of information that will put new and expensive drugs on the market. 

In regard to trends unrelated to drug price, Toan said that "physician connectivity" will increase with the use of hand-held prescribing devices that contain formularies, patient records, and drug-interaction databases. These devices could reduce pharmacy callbacks since physicians, before issuing prescriptions, will have information about potential drug interactions and can choose formulary over nonformulary drugs. 

To promote this technology, Express Scripts has agreed to provide the PocketScript Inc.'s wireless, handheld electronic prescribing system to the 15,000 physicians in the PBM's database who write the greatest number of prescriptions. Toan estimated that, in the next three to five years, up to 30 percent of all prescriptions could be generated using electronic devices.