Pharmacists Can Expect Key Shift in Rx Payments in 2006

The nation's community pharmacistscan expect to see significantgrowth in the demand for prescriptiondrugs next year, but they can also counton a major change in the source ofpayments for those medicines, accordingto a new report from the Centers forMedicare and Medicaid Services (CMS).

Out-of-pocket spending for prescriptionproducts, which has been rising by6% to 8% annually in recent years, willactually decline during 2005 by 1.5%,according to CMS. Behind that shift isthe new Medicare prescription drugbenefit, which is scheduled to begincovering Rx costs for millions of Americanseniors starting January l, 2006.

At the same time, the proportion oftotal US drug spending covered byMedicare is expected to jump dramatically,from only 2% of the total dollarmarket this year to 28% of the marketin 2006, the report noted.

The good news: researchers for CMSconcluded that while the new MedicareRx program will "significantlyincrease prescription drug use andreduce out-of-pocket spending for seniors," it will not cause any majorincrease in US health care spending.

That is because "price discounts associatedwith the new benefit will nearlyoffset the increased utilization associatedwith extending insurance coverageto the Medicare population," CMS said.

The bottom line: the higher Medicaiddrug spending that is expected tostart next year is projected to add only0.5 percentage points to the total drugspending growth rate in 2006—all of itresulting from greater utilization ofprescription drugs due to lower drugprices and better drug coverage, thereport concluded.

Mr. Rankin is a freelance medical writer.