Prescription Drugs Inflation Down From 6.2% to 2.2% in Just Over Two Years
Bozeman, Montana (PRWEB) March 13, 2004 –
Since hitting a five year high of 5.0% in November and December 2002, annual health care inflation declined to a current level of 3.8% according to a report by HealthINFLATION News, a monthly newsletter which tracks Bureau of Labor Statistics inflation reports.
A drop in annual inflation for prescription drugs has been a key driver in the deceleration of inflation for overall health care inflation. Prescription drugs inflation dropped from a five year high of 6.2% in November 2001 to 2.2% in January 2004.
In contrast health care expenditures continued to climb with the government recently reporting Health Care spending rose 9.3 percent in 2002. This means many people are paying more for medical care coverage including prescription drugs because they are purchasing more prescriptions drugs or paying greater co-payments. Today, inflation for prescription drugs at 2.2% is slightly above the CPI average of all consumer items at 1.9%.
One reason for the fall in inflation in prescription drugs is the shift of some popular prescribed medicines to over-the-counter drugs. According to Dan Ginsburg of the U.S. Bureau Labor Statistics, Â?the rate of increase for prescription drugs and medical supplies fell to 2.5 percent last year. Several highly popular prescription drugs switched to over-the-counter status. When this change in status occurs, the over-the-counter version is priced in place of the prescription version and the item remains within the prescription drugs and medical supplies sample.Â?
Another reason for the fall in inflation in prescription drugs cited by Ginsburg is the number of drugs going off-patent, Â?last year some of the slowdown in the growth of this [Prescription Drugs] index was related to a loss of patent protection on a number of name-brand drugs in the CPI sample. When this occurs a probability selection is made between the name-brand and available therapeutically equivalent generic drugs, thus several brand-to-generic substitutions were reflected in the CPI prescription drug sample.Â?
Consumers may not see the benefits of reduced inflation in prescription drugs. For example, many seniors feel the pinch from the cost of multiple high-priced maintenance drugs. Employees may face an increase in their out-of-pocket costs from double-digit increases in insurance premiums and cost shifting by employers to higher deductibles and co-pays.
HealthINFLATION News is published monthly, reporting health care inflation for the four U.S. regions and 14 major metropolitan areas.
# # #