Retail Prescription Drug Spending Hits Lowest Growth Rate in Over 50 Years

Retail Prescription Drug Spending Hits Lowest Growth Rate in Over 50 Years

01.10.12 | By Greg Lopes

Yesterday, the government released its annual report on how much we're spending as a country on health care goods and services. Formally known as the National Health Expenditure Accounts, the government research shows a continued rate of historically low spending growth for retail prescription medicines.

Each year around this time, the health care spending data is published in the journal Health Affairs. For 2010, total spending on retail prescription medicines was $259 billion, a mere 1.2 percent uptick from last year. This is the lowest growth rate in prescription drug spending in the 50+ years that the government has been compiling these health expenditure data.

The overall health spending growth rate between 2009 and 2010 was 3.9 percent, which is the second lowest growth rate in total health spending since 1960. And only 3 percent of this overall health spending growth was due to prescription drugs; the other 97 percent of spending growth was due to all other health care services.

These data make me think about the interesting juxtaposition between the extremely high value prescription medicines provide compared to the very small percentage of overall health care spending they make up.

If we consider that prescription medicines have played a key role in the dramatic declines in death rates resulting from cancer, heart disease and HIV/AIDS in recent years, while accounting for such a small share in our overall health spending, these numbers are rather remarkable.

I've pointed out several times that, according to Harvard researchers, during the first full year of the Medicare prescription drug program, the Medicare program as a whole saved over $13 billion in non-drug spending.

This data confirms once again that medicines have tremendous value in our health care system.

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