CMS REPORT FINDS Rx DRUG SPENDING SLOWED IN 2003

Spending growth for prescription drugs in the U.S. decelerated at a rapid rate in 2003, according to new data released by the Centers for Medicare & Medicaid Services (CMS).

In its annual report on national healthcare spending trends, CMS' Office of the Actuary concluded that retail sales of prescription drugs increased in 2003 by nearly 11 percent to $179 billion, accounting for 11 percent of national health spending that year. However, while the increase in sales is consistent with average annual growth recorded between 1992 and 1997, it was significantly slower than the nearly 15 percent growth rate in 2002.

According to CMS' report, published Jan. 11, the major factors contributing to this spending slowdown on pharmaceuticals included a reduction in the growth of prescriptions dispensed; the conversion of the popular allergy drug Claritin (loratadine) to OTC status; increased availability and purchase of lower-priced generic versions of brand drugs; an expanded use of tiered co-payment plans that put more cost-sharing responsibilities on consumers; and a shift in Rx drug sales to pharmacies outside the U.S.

CMS published the report in the January/February 2005 issue of Health Affairs, a bimonthly journal published by Project HOPE. Selected articles from the issue are available at http://www.healthaffairs.org (http://www.healthaffairs.org).

Detailed national health spending estimates are available at http://www.cms.hhs.gov/statistics/nhe/default.asp (http://www.cms.hhs.gov/statistics/nhe/default.asp).