NCPA - National Center for Policy Analysis

Big Jump In Prescription Drug Spending Last Year

March 29, 2002

Americans spent 17 percent more for prescription drugs in 2001 than they did the previous year, according to a new report from the National Institute for Health Care Management Foundation. That is prompting many analysts to watch and see how health insurance companies react in setting their premiums.

  • Total prescription-drug spending in 2001 topped $154 billion -- rising $22.5 billion from 2000.
  • The average cost of a prescription at a pharmacy rose about 10 percent -- to $49.84.
  • But the average bill for some of the top 50 drugs sold in the U.S. was $71.56.
  • For comparison, the consumer price index rose last year by 2.8 percent.

The report attributed the sharp rise to more people using prescription drugs and more people turning to more expensive drugs. But there are other reasons as well, including lawsuits and government regulations, representatives of the insurance industry point out.

Mail-order pharmacies -- which often sell prescription drugs at a discount -- saw their sales rise 27 percent last year, to $20.7 billion.

Some observers believe the findings will pressure Congress to pass a drug benefit for Medicare. Medicare beneficiaries, who are largely seniors, are expected to spend about $80 to $85 billion for prescription drugs this year.

Source: Jill Carroll, "Prescription-Drug Spending Jumps 17 Percent," Wall Street Journal, March 29, 2002.


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