Managing Prescription Costs — Trends and Tips
Managing prescription medications is an important part of the overall health care cost picture, and a dimension that many employers want to understand. Appropriately prescribed medications can help prevent and treat illness and often help patients avoid more costly medical complications like hospitalizations. Yet, as statistics reveal, the cost and the use of prescription medications is on the rise, making it even more important to understand the key facts about prescription usage and learn about strategies that can help decrease overall costs.
Increased Use Equals Increased Cost
From 1997 to 2007, the number of prescriptions purchased in the United States increased 72%, while the population only grew 11%.1
In 2008, 90% of seniors and 58% of nonelderly adults took prescription medication on a regular basis.2
Retail prescription prices have increased on average 6.9% annually between 1997 and 2007, much faster than the average inflation rate of 2.6%.2
Spending in the US for prescription medications increased from $40.3 billion in 1990 to $216.7 billion in 2006. This is an increase of more than 5 times.1
From 1996 – 2004 and in 2006 the costs for prescription medications increased at a higher rate than for other types of health care. Even though recently there has been some decrease in the rate of increase, experts predict that costs will rise more dramatically in the next few years as baby boomers age.
Tips for Managing Medication Costs
To combat these rising costs and to get the best value for our prescription dollar the best thing for employers and consumers to do is to become more engaged in making decisions regarding prescription medications.
Work with health plans that understand the science
Most high cost medications have alternatives that are just as safe and effective but may cost many times less. For example: highly advertised Lyrica is used for many conditions when there are multiple low cost alternatives available. Partner with an organization that effectively uses science to recommend appropriate medication use.
Use effective benefit designs
Employers should support benefit designs that focus on cost effective treatments and encourage employees to ask questions about treatment options.
Encourage questions and be engaged with your provider
Encourage your employees to ask questions to find out if the costs and side effects of a certain treatment are worth the benefit. Here are a few sample questions:
Why do I need to take this medication?
How much can this medication actually benefit me?
What does the science say about this medication?
What are the side effects? What if I want to stop taking it?
How much does it cost? Is it safer or more effective than the alternatives?
Is a generic available?
Ask for generics.
Many people are surprised to discover that less costly generic medications are as safe and effective as brand-name medications. Generics cost less because manufacturers compete and lower prices, not because of a difference in quality. In the past few years many popular brand-names have become generic. Encourage your employees to take advantage of these low cost options.
Encourage use of critical medications
Taking medications regularly for chronic conditions can actually help decrease overall health care costs. For people with conditions like diabetes, heart disease and high blood pressure regular medication use can prevent complications, and reduce hospitalizations and future costs.
Medication use and costs will continue to rise. The best way to be prepared is to become involved, ask questions and encourage your employees, as health care consumers, to do the same.
1Kaiser Family Foundation. September 2008. Prescription Drug Trends. 2Kaiser Family Foundation. February 2010. Prescription Drug Costs.
