[Congressional Record Volume 144, Number 144 (Monday, October 12, 1998)]
[Extensions of Remarks]
[Page E2101]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E2101]]
      PRESCRIPTION DRUG INFLATION: WHY WE NEED TO PASS A MEDICARE 
                       PRESCRIPTION DRUG PROGRAM

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Monday, October 12, 1998

  Mr. STARK. Mr. Speaker, last week, I introduced H.R. 4753, a bill to 
provide a Medicare prescription drug benefit.
  Prescription drug expenses are projected to continue to inflate at a 
rate far above the general inflation in the economy and in medical 
care. More and more Americans and Medicare retirees will be facing 
financial hardship in paying for prescription drugs in the coming 
years. A national prescription drug insurance program, which would 
utilize the buying efficiencies of the Medicare program, is the best 
way to help meet this growing problem.
  The September/October 1998 issue of Health Affairs contains a major 
article by HCFA actuaries and economists entitled, ``The Next Ten Years 
of Health Spending: What Does the Future Hold?'' Following are the 
paragraphs from the article describing anticipated prescription drug 
spending. Clearly, if these predictions are half correct, Congress 
should act to help.

       Growth in prescription drug spending is expected to 
     continue at a relatively rapid pace, supported by continued 
     declines in our out-of-pocket payments for drugs associated 
     with the shift of Medicare patients into managed care and an 
     acceleration in new product introductions. Drug-price 
     inflation began to rise in early 1998 and is expected to 
     exceed its relatively slow pace of recent years through 2007.
       Drugs. Recent rapid growth in drug costs over the past two 
     years has often been cited as a contributing factor to health 
     plans' escalating costs. Recent higher spending growth is 
     almost entirely accounted for by rising utilization (number 
     of prescriptions) and intensity (including changes in size 
     and mix of prescriptions). Drug price inflation (as measured 
     by the CPI for prescription drugs), which has historically 
     been a major factor in rapid growth, has been relatively 
     restrained since 1993. Excess inflation for prescription 
     drugs averaged only 0.5 percent for 1993-1997, following a 
     period (1982-1993) of 5.3 percent average growth.
       Response by both consumers and health plans to slower 
     growth in consumers' out-of-pocket payments for drugs has 
     clearly played a role in the recent rise in utilization. In 
     addition to slower drug price inflation, growth in out-of-
     pocket expenditures has been low since 1993, which reflects 
     the shift to managed care, in which copayments for drugs tend 
     to be much lower.
       Growth in drug spending is expected to accelerate 
     moderately through 1998 and to sustain fairly rapid rates of 
     growth through 2007. Real per capita growth is expected to 
     average just below 6 percent, about equal to the average 
     during the 1980's. While drug prices are projected to 
     accelerate from recent lows, average inflation rates are 
     assumed to remain below the exceptionally rapid pace of the 
     1980's, with excess drug price inflation averaging 1.7 
     percent for 1998-2007. Rapid growth in use and intensity are 
     expected to continue to account for most of the growth in 
     spending.

     

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