Explaining Drug Spending Trends: Does Perception Match Reality?

Authors: Dubois, RW; Chawla, AJ; Neslusan, CA; Smith, MW; and Wade, S.

Several studies have made clear that drug expenditures are rising more rapidly than other health care spending. What has not been clear, however, is how much drug spending is driven by price rather than volume and whether volume increases are appropriate. This Health Affairs DataWatch takes a closer look at the components and drivers of drug spending using large claims databases from managed care and employer-sponsored health benefit plans. This study found increased volume, not rising pricing, accounted for drugs’ higher levels of spending.

For more information about the methodology used for this study, see Measuring the Costs and Benefits of Pharmaceutical Expenditures, Expert Review of Pharmacoeconomics and Outcomes Research, October 2002.