Explaining Drug Spending Trends: Does Perception Match Reality?

Abstract

Several recent studies have made clear that drug expenditures are rising more rapidly than other health care spending. What has not been clear, however, is how much drug spending is driven by price rather than volume and whether volume increases are appropriate. This DataWatch takes a closer look at the components and drivers of drug spending using large claims databases from managed care and employer-sponsored health benefit plans. In both environments this study found volume, not price, to be the largest driver of drug spending for seven diseases studied. For four of the diseases, we review the clinical issues that may have influenced volume growth.

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