----- Original Message ----- From: "Kevin Robert Dean" <qualiall_2 at yahoo.com> To: <lbo-talk at lists.panix.com> Sent: Monday, July 16, 2001 11:26 AM Subject: Prescription drug costs
> I don't know what to make of this study---
>
>
> Prescription Drug Use Driving Jump in Costs
>
> http://www.newswise.com/articles/2001/7/PRESCRIP.MHS.html
>
> Contact: Kara Gavin, kegavin at umich.edu, or
> Valerie Gliem, vgliem at umich.edu, 734-764-2220
> Embargoed for release July 13, 2001
>
> Increased use of prescription drugs - especially new
> ones - far outpaces price hikes as reason for dramatic
> overall cost increase, U-M study finds
>
> HMOs and other managed care plans see sharper cost
> jumps than traditional insurance
>
> ANN ARBOR, MI - A dramatic rise in the utilization of
> prescription drugs, especially newly introduced ones,
> is the biggest reason for double-digit increases in
> the overall cost of prescription drugs for American
> workers - not inflation in the price of established
> drugs, a new University of Michigan study confirms.
>
> Managed care insurance plans designed to contain
> health care costs are actually seeing the biggest
> jumps in prescription drug costs, as much as 35
> percent in two years, due to their members' rush on
> prescriptions for existing and new drugs. In the same
> period, traditional insurance plans saw a 17 percent
> rise in spending - almost all from the use of new
> drugs.
>
> The study, published today in the July issue of the
> American Journal of Managed Care by researchers from
> the U-M Medical School, School of Public Health and
> College of Pharmacy, looked at data from a single
> large national employer that offers a variety of
> insurance plans and prescription coverage options to
> its employees. The data, collected between 1996 and
> 1998, represent the prescription costs for 44,228
> hourly and 75,433 salaried employees nationwide.
>
> Though the data are not representative of the country
> as a whole, the study offers a unique insight into the
> factors that contribute to overall prescription drug
> spending, the impact of new products versus existing
> ones, and, for the first time, the differences in
> spending among different insurance plan types. It also
> confirms other, earlier findings on the impact of the
> general increase in utilization, as compared with the
> increase in product prices.
>
> "As our nation continues the debate over federal
> prescription drug benefits, price controls and the
> impact of drug costs on insurance premiums, we hope
> these data will help the general understanding of
> what's fueling drug cost increases," says lead author
> Michael Chernew, Ph.D, associate professor of health
> management and policy and of internal medicine. "And
> from what we can see, the increases for employed
> adults are coming more from the demand for
> prescription drugs than from simple price increases on
> existing drugs - although this trend makes the prices
> of newly introduced products that much more
> important."
>
> "It's important to recognize that growth in spending
> on prescription drugs isn't necessarily undesirable,
> because pharmaceuticals may reduce spending on other
> health care service such as procedures, with a better
> result for patients," says Mark Fendrick, M.D.,
> associate professor of internal medicine and of health
> management & policy. "But in order to understand that
> larger picture, we need to know how prescription drug
> spending growth breaks down, and how different forms
> of insurance are affected depending on their approach
> to prescription coverage."
>
> Fendrick co-directs, and Chernew belongs to, CHOICES,
> the U-M Consortium for Health Outcomes, Innovation &
> Cost Effectiveness Studies. Also on the team were Dean
> Smith, Ph.D., professor of health management and
> policy at the School of Public Health, and Duane
> Kirking, Ph.D., professor and chair of social and
> administrative sciences in the College of Pharmacy.
>
> The study was funded by the employer whose data were
> used, and not by the pharmaceutical or health
> insurance industries or their representatives.
>
> The new study follows on the heels of other reports on
> prescription drug costs based on national market
> research, surveys or federal government statistics.
> The employer-supplied data used by the U-M team gives
> a snapshot of real expenditures for employed adults
> nationwide, covered under employer-paid insurance
> plans with a variety of policies, benefits and drug
> co-payments. The analysis looked at monthly spending
> per employee on new and existing drugs.
>
> No matter the type of insurance, overall drug costs
> and spending per employee increased by a sizable
> percentage in the two years examined. The employer's
> traditional fee-for-service (FFS) plan experienced a
> 17.3 percent growth, while the three preferred
> provider organizations (a type of managed care plan
> commonly known as PPOs) saw a 30.7 percent rise and
> the eight health maintenance organizations (HMOs)
> faced a 34.8 percent jump.
>
> The researchers broke down the overall percentage
> increases for each plan type by their components -
> namely, different classes of drugs. Core drugs were
> those that were prescribed to members of at least one
> plan in 1996 and 1998, while new drugs were those
> introduced to the market and used by members of at
> least one plan after 1996. Abandoned drugs were those
> used in 1996 but not used by any members in 1998.
>
> In all, nearly 21 percentage points of the 35 percent
> increase in HMO drug spending were due to
> prescriptions for core products, while 15 percentage
> points were due to prescriptions for new products and
> there was a slight drop due to abandonment of some
> products.
>
> By contrast, the 17.3 percent increase seen by the
> fee-for-service plan was due to a 17.4 percent rise
> due to prescriptions for new drugs, and a 2.1 increase
> in core drug spending offset by a 2.2 percent drop due
> to drug abandonment. PPO plans had a 19.9 percent
> increase in costs due to prescriptions for new drugs,
> coupled with a 12.3 percent increase in core drug
> costs, and a 1.5 drop in costs for abandoned drugs.
>
> The major differences in spending increases for core
> drugs and new drugs led the researchers to examine the
> core drug patterns more closely. They found that
> changes in the actual price of core drugs only
> accounted for 3.5 to 4 percentage points of the rise
> across the board. Much more of the change in core drug
> costs was due to fluctuation in the quantity of
> prescriptions, including the number and the mix of
> existing products of different doses and prices. The
> overall quantity in the fee-for-service plan dropped,
> while HMOs saw a 16.8 percent rise in quantity.
>
> http://www.newswise.com/articles/2001/7/PRESCRIP.MHS.html
>
>
>
> =====
> Kevin Dean
> Buffalo, NY
> ICQ: 8616001
> http://www.yaysoft.com
>
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