Bring on the generics, require hard step edits on any brand name for requirement to fail generics before buying brand name options.

Many generic options offer efficacy and very manageable tolerability compared to newer (significantly higher priced) options, with equal or better outcomes.

There are other important issues. These relate to value and appropriateness of the medications available. Many of the “newer” medications are retreads or patent/exclusivity extending gimics which offer no real (proven) advantages over their older, often generically availalbe or at least less expensive alternatives (after considering rebates). Just because outpatient medication costs are a smaller percentage does not mean that every outpatient medicine offers good value. It certainly does not mean that they are used safely and effectively, and as they have been studied.

When costs of any given medication category are expected to fall over time, don’t we still need to ask why it costs more in 2006 for not remarkably better treatments and certainly not better outcomes ten years down the road.

No matter what analysis Schondelmeyer does, he will be highly inaccurate since he never accounts for rebates and he includes a significant number of brands that have lost exclusivity,where the prices may be very high, but the use is next to nothing (often <1% of total scripts for the chemical entity). By the way, I think he acknowledged both of these points when he testified in front of a congressional hearing.

His analyses are wonderful for headlines, but simply aren’t based on accurate assumptions.

Atlex

Figure 2 - shows that in the top 25 percentile rankings, the amount of expenses increased by 35%.

Figure 3 - shows that, across the board, the number of people with out of pocket expenses has decreased.

So - the total out of pocket expenses for everyone combined went down, but for the top 25%, the expenses went UP significantly.

Figure 6 - breaks the total expenses down by who is paying. Managed care is paying 7% less and the majority of that is getting picked up by the patients and by the states (out of pocket expenses and medicaid).

Based on these data, we can postulate that managed care organizations are identifying high risk patients and high cost treatments and they’re placing more of the cost for these people on the patients themselves and on the states in the form of medicare coverage. Because we know this is the business model of many managed care organizations, the data simply indicates that what they’re doing is WORKING. The high risk/high cost people are paying more of their own costs . . . and everyone else gets a SLIGHT reduction in their out of pocket costs.

I think that this is a far more interesting story than the total dollar and percentage increase in costs for drugs.

It actually doesn’t put that to bed. In this target population (18-44), it is undoubtedly true that drug costs far exceed 10% of overall healthcare spending. This group has very low (relatively speaking) hospital costs. However, for other parts of the population, that is not the case. For instance, instance, taken as a whole, the over 65 (or 70 or 80) population has much higher hospitalization costs due to cancer, MIs, pneumonia, etc. Of course, the biggest spend, perhaps as much as 50% of one lifetime healthcare spend is in the last 6 months of life. If only we could prospectively predict that, we might see a huge cost savings (that is meant to be tongue in cheek).

Bottom line, when all ages are considered, the number does drop to roughly 10%-11%.

Atlex

In any event, I assume this age group is also probably least likely to receive drugs in hospitals.