Factors contributing to trends in prescription drug expenditures

Between 1970 and 1995, national prescription drug expenditures and Medicaid drug expenditures increased proportionately less than did total health care expenditures and total Medicaid expenditures, respectively, although they increased to a greater extent than did expenditures in other sectors of the economy. General inflation, which cannot be controlled by health care policy, has been the major factor contributing to the growth in national prescription drug expenditures. Other contributors were population growth, increases in per capita prescription use, increases in per-prescription intensity (ie, real drug expenditures), and the fact that prescription drug prices exceeded general inflation. Medicaid drug expenditures have increased mainly because of growth in the number of drug recipients, increases in prescription drug prices, and economy-wide inflation.