Projecting future drug expenditures--1996.

Abstract

The use of information on inflation, pharmacoeconomics, generic competition, new drug entities, site-specific drug-use patterns, legislation, and the changing health care environment in the projection of drug expenditures is discussed. Drug price inflation has declined from 6.9% in 1991 to 2.1% for part of 1995. Much of the decline is attributable to deep discounts given by manufacturers to managed care institutions. Some marketing specialists are predicting that drug manufacturers will begin to scale back discounts. Pharmaceutical industry analysts project that overall price increase for pharmaceuticals in the next 12-24 months will average 2.8% (range, 0-6%). Pharmacists need to be able to understand and critically evaluate pharmacoeconomic research, particularly studies conducted by the pharmaceutical industry. Savings due to increases in generic product selection may be offset to some degree by extensions of patent expiration dates under the General Agreement on Tariffs and Trade (GATT). Drug budget projections should include a complete review of new drugs and biotechnology agents pending FDA approval, drugs pending approval for new indications, and common unlabeled uses of expensive existing agents. Various methods are available for tracking drug-use patterns in specific practice settings. When resources are limited, pharmacy managers may elect to target only high-cost drugs; a proactive approach, such as projecting costs and developing guidelines for costly agents before their market release and before consideration by the pharmacy and therapeutics committee, is advantageous. Relevant legislative activities in 1995 included reform proposals for Medicare, Medicaid, and FDA; the Federal Acquisition Streamlining Act; and GATT. Disease management and other approaches to pharmacy benefits have increased opportunities for cooperative arrangements between drug companies and health care providers that may have major effects on drug marketing and pricing. Combining information on inflation, pharmacoeconomics, generics, new drugs, practice-site drug-use patterns, federal legislation, and the changing health care environment is necessary for accurate projections of drug expenditures.