Projecting future drug expenditures—2008

Abstract

Drug expenditure trends in 2006 and 2007, projected drug expenditures by setting for 2008, and factors likely to influence drug expenditures are discussed. Various factors are likely to influence drug expenditures in 2008, including drugs in development, the diffusion of new drugs, drug safety concerns, generic drugs, Medicare Part D, and changes in the drug supply chain. The increasing availability of important generic drugs and drug safety concerns continue to moderate growth in drug expenditures. The drug supply chain remains dynamic and may influence drug expenditures, particularly in specialized therapeutic areas. Initial data suggest the Medicare Part D benefit has influenced drug expenditures, but the ultimate impact of the benefit on drug expenditures remains unclear. From 2005 to 2006, total drug expenditures increased by 8.7% to $275 billion. Drug expenditures in clinics continue to grow more rapidly than in other settings, with a 20.9% increase from 2005 to 2006, and drug expenditures in clinics are now greater than the amount spent in hospitals. Hospital drug expenditures increased at a moderate rate of only 3.8% from 2005 to 2006; through the first nine months of 2007, hospital drug expenditures increased by only 2.2% compared with the same period in 2006. In 2008, we project a 5-7% increase in drug expenditures in outpatient settings, a 12-14% increase in clinics, and a 4-6% increase in hospitals.