Drug Spending Lower in Q1 Than Previous Year

June 11, 2003 (PLANSPONSOR.com) - The rising tide of prescription drug costs may be beginning to ebb, as growth in prescription drug spending was lower during the first quarter of 2003 than the same period in 2002.

Growth in prescription drug spending was 11.3% during the first quarter of 2003, compared with a 16.9% during the same period the previous year. The slower spending is being attributed to a number of factors, including the proliferation of generic drug use, fewer cough and cold remedies due to a mild flu season, and the decline of estrogen drug use after concerns were raised about their safety, according to data from pharmacy benefits manager Express Scripts.

In fact, during the first quarter of 2003, 47% of all prescription claims processed by Express Scripts were for generic drugs, up from 43% a year earlier. With the increase in the use of generic drugs came a reduction in the dollar outlay for prescription drugs by 3.2% during this period.

If this trend continues, Express Scripts forecasts an overall 15.5%-increase for drug spending in 2003. By comparison, during 2002, prescription drug spending increased 18.5% to $585.60 per Express Scripts member per year, up from $494.20 the previous year.

Generic Equivalent

Express Scripts credits the increase of generics to two factors. First, many clients added a third tier to the drug co-payment structure, which in turn limited the rise drug trend to 7% on average. Further, clients already using a three-tier co-payment structure that modified co-payment levels experienced only a 10.8%-cost increase, the data found. With a third tier, patients typically pay the most for nonformulary brand-name drugs, less for formulary brand-name drugs, and the least for generics (See Three-Tier Systems Cut Prescription Costs ).

Additionally, the St. Louis-based company said the number of members in “step-therapy” programs grew significantly between 2001 and 2002, from 2 million to 9 million. With step therapy, members receiving a new prescription for a brand-name drug instead try a generic drug, with their physician’s approval.