Expensive new meds increase drug expenditures in the North Carolina Medicaid program

October 05, 2004

As states continue to struggle to find ways to control Medicaid costs, a new study published in the September/October issue of Annals of Family Medicine finds that an increase in the number of prescriptions for new and more expensive medications resulted in a significant rise in drug costs in one state's Medicaid program.

Analyzing claims for more than 1,204,000 North Carolina Medicaid enrollees between 1998 and 2000, researchers from the University of North Carolina at Chapel Hill found that prescription drug coverage costs rose 22.8 percent annually during the study period, from $503 per person per year in 1998 to $759 in 2000. The average number of prescriptions filled per person per year also increased - from 13 in 1998 to 15.5 in 2000.

The authors point out that increased prescribing for six drugs (Prilosec, Zyprexa, Risperdal, Prevacid, Celebrex and Claritin) accounted for more than 25 percent of the total increase in expenditures. They add that some of the drugs with the greatest expenditures in this study are among those with the largest marketing budgets, and they note that for most of the newer drugs, improved cost-effectiveness has not been shown.

To help control rising prescription drug expenditures, they authors suggest that efforts should be undertaken to improve appropriate and cost-effective prescribing.

They note that prescription drug expenditures are the most rapidly growing component of total health care expenditures, and the widespread growth in prescription expenditures has particularly affected state Medicaid programs.

A possible solution to the issue of rising prescription costs is offered in a study by McMullin and colleagues also in the September/October 2004 issue of Annals of Family Medicine. Their study findings point to the effectiveness of electronic decision support systems in lowering prescription expenditures.
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Annals of Family Medicine is a peer-reviewed research journal that provides a cross-disciplinary forum for new, evidence-based information affecting the primary care discipline. Launched in May 2003, the journal is sponsored by six family medical organizations, including the American Academy of Family Physicians, the American Board of Family Practice, the Society of Teachers of Family Medicine, the Association of Departments of Family Medicine, the Association of Family Practice Residency Directors and the North American Primary Care Research Group. The journal is published six times each year and contains original research from the clinical, biomedical, social and health services areas, as well as contributions on methodology and theory, selected reviews, essays and editorials. A board of directors with representatives from each of the sponsoring organizations oversees Annals. Complete editorial content and interactive discussion groups can be accessed free of charge on the journal's Web site, www.annfammed.org.

American Academy of Family Physicians

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