Spending on prescription drugs increases

An annual study of U.S. health care spending from the Centers for Medicare & Medicaid Services' Office of the Actuary found that prescription drug spending accelerated in 2006 after six straight years of slowing growth.

Retail drug spending increased 8.5 percent in 2006, compared to 5.8 percent in 2005. The study's authors found that about half of the 2006 spending increase was due to growth in the use of prescription drugs. They cited a number of contributing factors:

• Seniors covered by Medicare Part D or other insurance used more drugs and were more likely to fill a prescription than senior citizens without drug coverage;

• A high number of new indications were approved for existing drugs;

• There was increased use of drugs in a number of therapeutic classes;

• There was increased use of expensive specialty drugs.

The other half of the spending increase was attributed to changes in the mix of drugs (e.g., brand vs. generic) taken by patients, lower drug rebates and an increase in the average units per prescription.

Overall, spending on U.S. health care grew 6.7 percent in 2006 to $2.1 trillion, or $7,026 per person. That rate was slightly faster than the 6.5 percent increase in 2005.

The full report is in the January/February 2008 issue of Health Affairs.

More private payers adopt RBRVS

An AMA study of 127 public and private payers covering 123 million patients found that 77 percent of payers use Medicare's Resource-Based Relative Value Scale (RBRVS) to help determine what they pay physicians. That's up from a 74 percent adoption rate in 2001 and a 63 percent rate in 1998.

However, the study, published in Medicare RBRVS 2007: The Physicians' Guide, found that the majority of payers are not using Medicare's conversion factor (which determines the final payment amount). The conversion factor amounts reported by most respondents were higher than Medicare's.

For more on the RBRVS and the 29-member committee that significantly influences its assigned values, see “What Every Physician Should Know About the RUC.”