Mon, Jul 06, 2009

Washington

AT A GLANCE

Growth of health-care spending slows a bit; generic drugs cited

By Kevin Freking
THE ASSOCIATED PRESS
Tucson, Arizona | Published: 01.06.2009
WASHINGTON — Spending on health care slowed slightly in 2007 as consumers turned more to generic drugs instead of brand names to fill their medicine cabinets, the government reported Monday.
Although the cost of buying drugs, visiting a doctor or going to a hospital continued to increase faster than the overall economy, the 6.1 percent growth rate for all health-care spending was the slowest since 1998. In 2006, spending increased 6.7 percent.
Officials worry that devoting more and more resources to health care makes it harder for families to meet other pressing priorities and for businesses to compete internationally.
Overall, Americans spent $2.2 trillion on health care, an average of $7,421 per person, for the year.
About 67 percent of medications dispensed in 2007 were generic drugs — up from 63 percent the year before. Generics can cost as little as one-third the price of brand names.
Several factors are helping to drive the increased use of generics. First, insurers are steering consumers to lower-priced medicines by charging low co-payments for certain drugs. Meanwhile, they charge higher co-payments for medicines they want consumers to avoid for safety and financial reasons.
Large retailers and grocers are encouraging consumers to buy generics by enticing them into their stores with low prices.
Several blockbuster brand-name drugs lost their patent exclusivity in 2006, generating competition. Notable examples include Flonase, an allergy medicine; Zocor, a medicine used to lower cholesterol; and Zoloft, an antidepressant.
Federal officials said safety concerns also probably influenced spending on medicine. The Food and Drug Administration issued more of its most serious warnings than in previous years — 68 in 2007, compared with 58 the year before and 21 in 2003.
Another aspect of the overall spending slowdown came from a decrease in administrative expenses associated with the new Medicare drug benefit. The program kicked in during 2006, generating a substantial uptick in administrative expenses.
Among the major components of the health-care industry, officials found:
• Hospital spending, which makes up nearly one-third of all health spending, increased 7.3 percent. In the 1990s, spending on hospital services grew at a 5.2 percent rate, due in part to more tightly managed care from insurers.
• Spending for physicians and clinical services grew 6.5 percent, the same rate as the year before.
• The cost of nursing-home care increased 4.8 percent.
• Spending for home health care increased by 11.3 percent.
• Spending for private health insurance grew 6 percent, unchanged from the year before but much lower than in 2002, when it hit 10.7 percent.
— Health Affairs
On the Net
Health Affairs: www.healthaffairs.org
Centers for Medicare and Medicaid Services: www.cms.hhs.gov