January
2007 »
Generic drugs help trim health-care costs
9 January, 2007
The Health care spending grew in 2005
at the slowest pace in six years thanks in part to a
greater reliance on generic drugs.
Spending went up 6.9 percent in 2005, approaching $2
trillion. That represents about $1 out of every $6 spent
in the U.S., compared with about $1 out of every $10
in the early 1980s.
Private and public payers for health care, such as
insurers, states and the federal government, said such
a spending pattern cannot be sustained without harming
the economy. Some of the tools they've put in place
to slow health care spending appear to have had an impact.
The slower growth in 2005 is good news for consumers
and taxpayers, but economists aren't confident the trend
will last. Richard Foster, the chief actuary for the
Centers for Medicare and Medicaid Services, said there
is a growing demand for expensive lifesaving equipment
and procedures.
Officials said prescription drugs played
the most important factor in slowing health-care spending
in 2005. The growth in spending on medicine was lower
than overall spending on health care for the first time
since the early '90s.
In the past five years, insurers have sought to slow
drug spending by giving customers an incentive to buy
generics or low-cost brand name drugs.
States also took steps to hold costs. They pooled together
to negotiate lower prices for medicine they provide
in Medicaid and encouraged use of generics. As a result,
drug spending by states went from an 11.6 percent increase
in 2004 to 2.8 percent in 2005.
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