Prescription Drug Cost Increase is Down

November 16, 2005 ( - Aon Consulting has found that the projected prescription drug cost increase is down more than a percentage point from last year's projection.

In its news release, Aon said its survey found that prescription drug costs are projected to increase by 11.8% during the next twelve months compared to last year’s increase of 13.1%. In addition, for the first time since 2001, Aon found that the prescription drug costs projection is lower than the projected cost increases for HMOs (12.9%) and POS and PPO plans (13%).

Bill Sharon, a senior vice president with Aon Consulting and director of the study, attributed the lower cost increase to three factors. “First, companies are successfully implementing three-tiered co-pay plan designs that are increasing employee use of less expensive generic drugs. Second, many prescription medications are expected to come off of patent, which will make them available through less expensive means, such as generics and over-the-counter medications. Finally, companies are using consumer-driven health plans and similar strategies to encourage employees to be more savvy consumers of prescription drugs,” he said in the news release.

Specialty drug costs are expected to increase substantially, though, at a rate of 19%.

Though experts say that many employer plans will save money in 2006 due to the impact of Medicare Part D legislation, the Aon Consulting study shows that future cost increases for retiree medical are projected at double-digit rates (12.9% for Medicare Supplement and 11.8% for Medicare Advantage).

The Aon study also shows that the costs of consumer-driven health plans (CDHP) are expected to increase by 13.3%, but experts expect to see improved CDHP trend rates in the future, as consumers change their health care purchasing behavior and more data becomes available.

Aon surveyed more than 70 leading health care insurers for its study.