PROJECTING FUTURE DRUG EXPENDITURES - 1995

Use of information on inflation, pharmacoeconomics, market introduction of new drug entities, practice-site-specific drug-use patterns, federal legislation, and the changing structure of health care delivery to project drug expenditures is discussed. Drug price inflation has been declining over the past several years, from 6.9% in 1991 to 2.2% for part of 1994. This can be attributed to both the growth of managed care and the industry's fear of government price controls. Pharmaceutical industry analysts project the overall price increase for pharmaceuticals in the next 12-24 months to be 2-5%. Pharmacoeconomic research is likely to become increasingly important; pharmacists will need to understand and critically evaluate this research. Drug budget projections should include a complete review of new drugs and biotechnology agents pending FDA approval, drugs pending approval for new indications, and common unlabeled uses of expensive existing agents. Various methods are available for tracking practice-site-specific drug-use patterns; those that categorize expenditures by diagnosis-related group may underestimate total expenditures associated with treating a given condition. State and federal legislation may affect drug rebates, prices, and ultimately drug expenditures. Although health care reform legislation did not pass in 1994, changes are occurring in both the pharmaceutical industry and in health care delivery, shifting the control of drug selection, utilization, and expenditures from individual prescribers to large purchasers. The accuracy of projections of drug expenditures can be improved by examining inflation, pharmacoeconomic research, the introduction of new drug entities, practice-site-specific drug-use patterns, federal legislation, and the changing structure of health care delivery.