U.S. HEALTHCARE SPENDING APPROACHES $2 TRILLION

Healthcare spending in the U.S. totaled almost $2 trillion in 2005, or $6,697 per person, with total spending for prescription drugs in 2005 pegged at $200.7 billion, the Centers for Medicare & Medicaid Services (CMS) reported.

Healthcare costs now account for 16 percent of the gross domestic product, according to data the agency released Jan. 9. The rate of healthcare inflation was 6.9 percent in 2005, lower than in 2004, when it was 7.2 percent, and in 2003, when it was 8.1 percent. For retail prescription drug sales, the CMS highlighted a decrease in the rate of growth -- 5.8 percent in 2005 following 8.6 percent growth in 2004 and 10.6 percent in 2003.

That makes 2005 the sixth consecutive year of decline in retail prescription drug sales, the agency said. This slowdown was primarily due to a dramatic decrease in Medicaid prescription drug spending, along with increased use of generic drugs, the proliferation of tiered copayment benefit plans, which slowed the use of brand drugs, and a decrease in the number of new drugs.

Private sources of funding, including out-of-pocket and private health insurance spending, accounted for 73 percent of spending for prescription drugs in 2005 and grew 6 percent in 2005, compared with 7.2 percent in 2004.

Medicare spending for prescription drugs grew 19.7 percent in 2005, and although it outpaced overall Medicare growth, it represented only a 1.2 percent share of total Medicare spending of $342 billion. These figures do not include expenditures associated with the full Part D prescription drug benefit, which did not begin until Jan. 1, 2006.