NCPA - National Center for Policy Analysis

"Trend" Propels U.S. "Drug Spend"

June 12, 2001

Contrary to popular belief, America's baby boomers are actually responsible for driving up year-over-year drug spending per person, according to pharmacy benefits management giant Merck-Medco.

Based on the experience of its 65 million members, Merck-Medco also predicts that prescription drug spending will double over the next five years, propelled by just two therapeutic categories: cardiovascular drugs and central nervous system medications.

The report focuses on the drivers of "drug spend," or the how much we spend on prescription drugs, and "drug trend," the percentage rate of change in drug spending over time.

  • Drug spending, not surprisingly, generally rises with age, with 65- to 79-year-olds accounting for the highest cost per member per year of any age group, at nearly $1,400 a year.
  • However, trend data tell a different story -- seniors age 65 and over actually account for about half the drug trend (the rate of the increase in drug spending) versus those in the 40 to 55 age bracket, according to the analysis.
  • Baby boomers' higher drug trend is partly due to higher utilization. But drug price inflation and boomers' switch from older, generic medications to newer, more expensive drugs also play into the trend.

Overall, Merck-Medco experienced a 14 percent increase in the drug trend last year, and the spend rate is expected to increase at a pace that will more than double spending by 2006, it said.

Source: "Baby boomers propel US drug spending," Reuters Health, June 6, 2001.


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