Pharmacists Can Expect Key Shift in Rx Payments in 2006

MAY 01, 2005
Ken Rankin

The nation's community pharmacists can expect to see significant growth in the demand for prescription drugs next year, but they can also count on a major change in the source of payments for those medicines, according to a new report from the Centers for Medicare and Medicaid Services (CMS).

Out-of-pocket spending for prescription products, which has been rising by 6% to 8% annually in recent years, will actually decline during 2005 by 1.5%, according to CMS. Behind that shift is the new Medicare prescription drug benefit, which is scheduled to begin covering Rx costs for millions of American seniors starting January l, 2006.

At the same time, the proportion of total US drug spending covered by Medicare is expected to jump dramatically, from only 2% of the total dollar market this year to 28% of the market in 2006, the report noted.

The good news: researchers for CMS concluded that while the new Medicare Rx program will "significantly increase prescription drug use and reduce out-of-pocket spending for seniors," it will not cause any major increase in US health care spending.

That is because "price discounts associated with the new benefit will nearly offset the increased utilization associated with extending insurance coverage to the Medicare population," CMS said.

The bottom line: the higher Medicaid drug spending that is expected to start next year is projected to add only 0.5 percentage points to the total drug spending growth rate in 2006—all of it resulting from greater utilization of prescription drugs due to lower drug prices and better drug coverage, the report concluded.

Mr. Rankin is a freelance medical writer.