Healthy Skepticism Library item: 1351

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Consumer Ads Seen as Fueling Rising Prescription Drug Benefit Costs
MedScape Today 2003 Jul 21;
http://www.medscape.com/viewarticle/458597

Full text:

Corporate executives of companies that offer health care benefits to employees are becoming increasingly concerned about the rising costs of providing prescription drug benefits. In a survey, these executives singled out direct-to-consumer advertising of prescription medications as the single factor most responsible for rising costs. But when it comes to devising solutions, executives favor actions they can take themselves.

The 2003 Arxcel Prescription Benefit Research Survey was conducted on behalf of Arxcel, Hamburg, NY. Corporate executives, mostly directors of human resources and benefits managers, were interviewed by telephone. A total of 101 surveys of executives representing companies with 1000 or more employees were completed.

Survey respondents were asked to select from a list of factors contributing to the rising cost of prescription drug benefits the cause they believe has played the largest role. Direct-to-consumer advertising was the most frequent answer, with 38.6% of responses (Cover Figure). It was followed by increased prices caused by inflation, 22.8%; expense of developing new drugs, 17.8%; changes in use of pharmaceutical products, 10.9%; and aging of the population, 9.9%.

How best to deal with problems of rising costs of providing prescription drug benefits? Corporate executives see the most likely solutions to be prescription drug benefit designs with tiered or higher copayment levels, with 81.2% of respondents rating this solution as 1 or 2 (using a scale of 1 to 4, with 1 indicating the most potential impact); providing incentives to use mail-order prescription service, 72.3%; and patient education about cost-effective use of medications, 67.3% (Figure).

Figure. Rating solutions to rising prescription drug benefit costs

While 1 in 5 corporate executives expect an overall percentage increase of 16% to 20% in prescription drug benefit costs for 2003, nearly half (49%) expect more moderate increases of 1% to 15%. Most employers indicate they will absorb the bulk of these increases, with 43% planning on passing on between 1% and 25% of cost increases. More than three fourths of respondents agreed that a member’s copayment for a prescription drug ideally should be no more than 20% of the total cost.

Corporate executives are split on whether they would like to see greater government involvement in health care. Those who favor more government involvement (52.5%) would like to see (in order of number of responses received) a prescription drug benefit under Medicare, more regulation of pharmaceutical companies, price controls, restrictions on direct-to-consumer advertising, financial assistance for drug research costs, shorter patent time frames, and streamlining of FDA regulations to speed drugs to market.

Among those who oppose greater government involvement, reasons given included the government would make things worse, the government is not qualified to intervene, better to let the free market correct itself, and there is already too much regulation/interference of business.

Acknowledgements

Data for the Cover Figure and in “Trend of the Month” are from the 2003 Arxcel Prescription Benefit Research Survey. More information is available at www.arxcel.com.