New Government Research Finds Drug Spending Grew at Lowest Rate in Over Four Decades

(Washington, DC)-A new report released today by researchers from the Centers for Medicare & Medicaid Services (CMS) shows a historic slowdown in drug spending growth driven largely by the increased use of generic medicines.  The Pharmaceutical Care Management Association (PCMA) believes this underscores the ability of proven pharmacy benefit management tools to lower costs while expanding access to medications.  PCMA also notes that even more savings can be generated if policymakers pursue efforts to increase physician adoption of electronic prescribing, encourage broader use of mail-service pharmacies and give the FDA the ability to approve generic alternatives to expensive biologic medicines.

“This new report underscores the value of tools pioneered by pharmacy benefit managers-including increasing the use of generic medicines-to lower costs and expand access to prescription drugs,” said PCMA President and CEO Mark Merritt.   “Pharmacy benefit managers could provide even greater savings and access if policymakers work to accelerate physician adoption of electronic prescribing, support greater use of mail-service pharmacies in federal programs, and empower the FDA to approve follow-on biologics and process applications for traditional generics in a timely manner.”

The new prescription drug data are contained in a report, “National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998,” published in Health Affairs.   The report finds that several key factors contributed to prescription drug spending growth slowing from 8.6 percent in 2006 to just 4.9 percent in 2007, including:

• Increased generic dispensing from 63 percent of prescriptions in 2006 to 67 percent in 2007; and
• Slower overall growth in prescription drug prices and concerns about safety.

Furthermore, researchers found that per enrollee spending in the Medicare prescription drug benefit declined in 2007.  Factors contributing to the lower per enrollee spending in Part D included:

• Lower bids by Medicare plans;
• Medicare prescription drug plans’ ability to negotiate discounts and rebates from drug companies; and
• Medicare drug plans’ monitoring utilization management.

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PCMA is the national association representing America’s pharmacy benefit managers (PBMs), which administer prescription drug plans for more than 210 million Americans with health coverage provided through Fortune 500 employers, health insurance plans, labor unions, and Medicare Part D.