Projecting future drug expenditures—2005

Abstract

Drug expenditure trends in 2003 and 2004 and projected drug expenditures for 2005 are discussed. Various factors are likely to affect drug costs, including drug prices, drugs in development, and generic drugs. In 2003 there was a continued moderation of the increase in drug expenditures. Drug expenditures increased by 11.4% from 2002 to 2003. Through the first nine months of 2004, expenditures increased by only 8.7% compared with 2003. This moderation can be attributed to many factors, particularly patent expirations, prescription-to-nonprescription conversions and a continued slowdown in new drug approvals. Higher cost sharing for consumers and continued weaknesses in several sectors of the U.S. economy affecting employment levels and insurance coverage also contributed to this smaller increase in drug utilization. It is expected that 2005 drug expenditure growth will out-pace the growth in overall health care expenditures and growth in the economy. In 2005, there should be a 10-12% increase in drug expenditures in outpatient settings, a 12-15% increase in clinics, and a 6-9% increase in hospitals.