NEWSLETTER
Chief Contributors to Climbing Drug Costs
March 2008
The latest studies by the insurance carriers contain no real surprises: prescription drug costs are increasing steadily. The drug benefit is the most frequently used part of any benefit plan and is the highest contributor to plan costs.
One of the carriers reports that out of every 100 employees, over 80% will make a drug claim. Drugs represent the highest average annual cost per worker at almost $650 per year.
Drug cost increases are a result of these and factors:
- Cost inflation
- Changes in therapeutic mix of medications
- Drug utilization
Drug cost inflation comes about from new and more expensive drug therapies being employed in treatment. Some previously untreatable or under-treated conditions are now being worked on. Many members of drug plans are now claiming thousands of dollars per year. One in every nineteen employees now spends over $5,000 per year and one in every 243 workers spends over $25,000 per year. These numbers are staggering and dramatically increase the cost of extended health care plans.
These are the top 10 medical conditions now being treated with medications:
- Cholesterol
- Cardiovascular
- Depression
- Gastrointestinal
- Diabetes
- Infections (antibiotics and anti-infectives)
- Asthma
- Rheumatoid arthritis
- Skin disorders
- All other
Cholesterol and cardiovascular disease rank as the top 2 conditions contributing to increasing drug costs. Thousands of Canadians make claims for medications covering these 2 diseases each year. Also rising rapidly and hitting 5th place now is the incidence of diabetes and treatment of it. Increased attention is being directed towards rheumatoid arthritis, which has moved up to 9th place and usage of very expensive medications such as Remicade.
Employers and plan administrators need to be aware that their employees will be using more medications and making more claims and higher dollar claims. The consequence for benefit plans is that the premiums for the prescription drug portion will also increase.
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