ealth care administrators are struggling to provide quality care while controlling costs. New advancements in the treatment of highly prevalent diseases contributed to the $1.2 trillion spent on health care in the United States in 1999.1 Moreover, during 1999, the growth in prescription drug expenditure led all other health care services, at 16.9%.1 The Centers for Medicare & Medicaid Studies (CMS) projected that by 2010, health care expenditure will total $2.6 trillion and account for 15.9% of the gross domestic product.
2These increases are fueled in part by the rising drug cost and increased utilization of pharmaceuticals.
1,2The increase in pharmacy expenditure can be attributed to a number of factors. For instance, over the past 30 years, the number of third parties expanding prescription benefits has increased, as evidenced by the decrease in the average percentage of prescription costs paid out-of-pocket by the consumer. Based on national estimates from CMS, 96.2% of medication costs were paid out-of-pocket (cash purchases) by consumers in 1960 compared with 26.6% in 1998. 3 Expanding coverage of prescription drugs lowers the effective price to the patient and may lead to increased utilization. 4 Also, as medical knowledge grows, newer, more expensive pharmaceutical agents are becoming the "standard of care" for more illnesses. Furthermore, there has been an increase in the number of diseases treated with multiple drug therapies, and, as a result of improved medical technology, life expectancy is being extended, allowing patients to utilize medications for longer periods of time. 5,6 Many other factors, including direct-to-consumer advertising, can also be associated with an increase in prescription drug ABSTRACT BACKGROUND: Health plans are using 3-tier copayment designs and other methods to control utilization that shifts drug costs to plan members. There is a need to determine the effects of increased member cost sharing on drug utilization and drug costs.