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Explaining drug spending trends: does perception match reality?

R W Dubois, A J Chawla, C A Neslusan

    Health Affairs (Project Hope)
    |March 16, 2000
    PubMed
    Summary
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    Rising drug expenditures are primarily driven by increased volume, not price, for seven common diseases. This analysis examines factors influencing this volume growth in health benefit plans.

    Area of Science:

    • Health economics
    • Pharmaceutical policy
    • Clinical outcomes research

    Background:

    • Healthcare spending is increasing, with drug expenditures rising faster than overall costs.
    • The specific drivers of this drug spending growth (price vs. volume) remain unclear.
    • Understanding these drivers is crucial for effective healthcare cost management.

    Purpose of the Study:

    • To differentiate the impact of drug price increases versus volume changes on overall drug spending.
    • To identify the primary drivers of drug spending for seven specific diseases.
    • To explore clinical factors potentially influencing drug volume growth.

    Main Methods:

    • Analysis of large claims databases from managed care and employer-sponsored health plans.
    • Decomposition of drug spending into price and volume components.

    Related Experiment Videos

  • Review of clinical issues relevant to drug utilization for selected diseases.

    • Main Results:

    • Volume, not price, was identified as the predominant driver of drug spending across seven studied diseases.
    • Significant variations in volume growth were observed, influenced by disease-specific clinical factors.
    • The study provides a detailed breakdown of spending components in different health plan environments.

    Conclusions:

    • Interventions aimed at controlling drug spending should focus on volume management strategies.
    • Clinical appropriateness and utilization patterns are key determinants of drug volume growth.
    • Further research into disease-specific utilization drivers can inform targeted cost-containment efforts.