Drop in Rx drug spending contributes to decline in US healthcare growth: report

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A sharply lower growth in the rise of prescription drug spending contributed to the slowdown in growth of US healthcare spending for the third consecutive year, the results of a federal study reported today in the Wall Street Journal shows. The government study, to be released today, is considered to be the most comprehensive tally of the nation’s annual health spending. According to the results, the US spent $1.9 trillion, or $6,697 per person, on healthcare in 2005, the latest year for which data are available. That was a rise of 6.9%, down from 7.2% in 2004 and the lowest growth rate since 1999. The slowdown in prescription drug spending has been notable – spending increased only 5.8% in 2005, down from 8.6% in 2004 and a peak of 18.2% in 1999, the report said. The drop in drug spending was partly caused by as sharp deceleration in drug expenditures by Medicaid. Drug spending by Medicaid rose 2.8% in 2005, compared with average annual increases of 15.4% for the program from 1994 to 2004. To restrain costs, states have worked together to get higher rebates on certain drugs and steered recipients to use those drugs. The withdrawal of Merck’s Vioxx also dampened spending, the report said. The study does not include data on the effect of the Medicare drug benefit, which was implemented in January 2006.
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