Health Affairs

Health Affairs, doi: 10.1377/hlthaff.28.1.w151 (Published online December 16, 2008) © 2008 by Project HOPE	New Online   Getting Health Reform Done   After the State of the Union   Incremental Reform   E-Health in Developing World   Most-Read Articles in 2009

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Prescription Drug Spending Trends In The United States: Looking Beyond The Turning Point

Murray Aitken ¹, Ernst R. Berndt ^2*, David M. Cutler ³

¹ Murray Aitken is senior vice president, Healthcare Insight, at IMS Health in Norwalk, Connecticut.
² Ernst Berndt is the Louis E. Seley Professor in Applied Economics, Alfred P. Sloan School of Management, at the Massachusetts Institute of Technology in Cambridge.
³ David Cutler is a professor of economics at Harvard University in Cambridge.

^*Corresponding author.

Abstract

Annual growth in real prescription drug spending averaged 9.9 percent during 1997-2007 but has slowed since 2003, falling to 1.6 percent in 2007. More patent expirations, increased generic penetration, and reduced new product innovations have contributed to this turning point. We document trends and identify underlying components: declines in the role of blockbuster drugs, increased importance of biologics and vaccines relative to traditional pharmaceuticals, and a changing medication mix away from those prescribed principally by primary care physicians toward those mostly prescribed by specialists. We conclude with policy implications. [Health Affairs 28, no. 1 (2009): w151-w160 (published online 16 December 2008; 10.1377/hlthaff.28.1.w151)]

Key Words: Chronic Care, Consumer Issues, Health Reform, International Issues, Pharmaceuticals, Health Spending

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