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Branded prescriptions drive rise in healthcare spending

Posted by Paula Turnquist

Although the use of healthcare services continues to decline, the privately insured are spending more on healthcare every year, according to the latest report from the Health Care Cost Institute. While spending went up in all major service categories between 2013 and 2014, the report found,the largest contributor to the cost increase was brand prescriptions.

The report tracked spending for Americans under 65 who are covered by employer-sponsored private insurance. Despite recording a nearly 16 percent decrease in the use of brand prescriptions from the previous year, the report found that spending on these drugs jumped by 8.2 percent, or $45 per capita. These results suggest that while prescriptions are becoming less common, the drugs that are being recommended are becoming even more expensive, something the HCCI report attributes to the recent introduction of several costly Hepatitis C drugs to the market.

Despite a decrease in brand prescription drug use, spending continues to rise.

So, who is bearing the burden of these expenses? Employers. According to the HCCI study, out-of-pocket spending on brand drugs decreased by $9 per capita between 2013 and 2014, despite the overall increase in cost. This suggests employers could be experiencing even more than the 8.2 percent jump in spending initially reported.

As concerning as it may be to healthcare payers, this trend is expected to continue. Benefits consultant Aon Hewitt predicts employers' pharmacy costs to increase by 10 percent this year, and another 10.5 percent in 2017. That's twice the firm's projected increase in overall healthcare spending, which it pins at 5 percent in 2016.

Posted by Paula Turnquist

Paula Turnquist joined Kelsey-Seybold Clinic in 2013 as sales manager of Employer Products. She is responsible for the sales of products and services ranging from employer group health plans to Executive Health and Occupational Medicine programs. Paula is originally from the Dallas-Fort Worth area and is a Nursing and Health Care Administration graduate of Texas Christian University in Fort Worth. She has worked in healthcare since 1976 serving major hospital systems, physician practices, venture capital start-ups and large insurance carriers.

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Topics: Costs of Employee Benefits

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