Hospital care expenses dropping

April 1, 2001

Pharmaceutical Representative

According to "Outlook 2001," a report released by the Boston-based Tufts Center for the Study of Drug Development, the United States today spends nearly three times as much on physician services as it does for prescription drugs, and over four times as much as it does for hospital care. Although prescription drugs, as a share of total U.S. healthcare spending, increased from 5.5% a decade ago to 8.5% today, hospital expenditures declined from nearly 37% to 33% during the same time period, while spending on physician services remained nearly constant.

According to "Outlook 2001," a report released by the Boston-based Tufts Center for the Study of Drug Development, the United States today spends nearly three times as much on physician services as it does for prescription drugs, and over four times as much as it does for hospital care. Although prescription drugs, as a share of total U.S. healthcare spending, increased from 5.5% a decade ago to 8.5% today, hospital expenditures declined from nearly 37% to 33% during the same time period, while spending on physician services remained nearly constant.

"Demand in the U.S. for drugs will increase significantly over the next several decades as an aging population demands more effective medicines to treat a greater variety of chronic diseases and lifestyle conditions," said Tufts Center Director Kenneth I. Kaitin. "Shifting expenditures from hospital care to prescription medicines is one way healthcare practitioners have responded to cost pressures, and that will likely continue."

According to the report:


•Â Pharmacy benefit managers will provide more services to Medicaid and Medicare beneficiaries at the state and federal levels.


• Pharmacy benefit managers will expand their services to include a much larger disease management component.


•Â Disease management will become an integral part of the Medicare program as more disease managers participate in the Medicare Coordinated Care Demonstration.


•Â Policy makers will transfer more risk to PBMs and disease managers, leading to more integration of costs across healthcare budgets.


•Â U.S. states will increase their involvement in pharmacy assistance programs for the elderly and disabled, as well as in drug price reimbursement efforts, especially if prescription drug legislation remains stalled in Congress. PR

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