Is the rising cost of prescription drugs impacting your bottom line?
At 10% of total U.S. Healthcare spent, the cost of prescription drugs must factor into the problem of the rising cost of healthcare in your company. There are several factors that cause the cost of prescriptions to increase nationally.
- From 1995-2007, the cost of brand medications rose 66% to $119.51 per prescription and generic costs rose 57% to $34.34 per prescription.
- The population of The United States is aging which increases the demand for prescription medication. From 2000-2005 Medicare enrollment increased 6%.
- The use of specialty or brand name drugs is increasing. From 1995-2007, the number of prescriptions increased 40% and 41% of that increase was brand name drugs.
- In 2006, nationally we spent $217 Billion on prescriptions. Insurance paid $95 Billion or 44% of that cost. (Kaiser Foundation, 2009)
If your spending is primarily based on brand name medications, the money you are spending is
affected by the patent laws which allow drug manufacturers to hold a patent for 20 years
from the date of patent filing. Once the patent has expired other companies can manufacture
the drug on a generic label. (Kaiser Foundation, 2009) This increases competition resulting
in lower costs. Many companies are taking the step of encouraging employees to find generic
or less expensive medications to take care of illnesses.
As a self-insured employer, you can see how your costs are increasing for medication for employees. The solution of a primary care health clinic on site provides cost containment through an on-site generic pharmaceutical dispensary. This helps hold down cost by making generics more convenient and allowing doctors to find alternative generic medications for employees who use the clinic.