Understanding Managed Care’s Focus On Prescription Drug Spending

Although managed care began with a focus on physician and hospital services, this focus has shifted in recent years towards prescription drug costs. This is partly because prescription drug spending has ballooned in the past 4 decades, as demonstrated in a congressional budget office report. For example, from 1980 to 2018, prescription spending has gone 5% of US healthcare spending to 10%, with a tenfold increase in total dollars spent. This has equated to a per capita increase from $140 to $1,073 per year.

According to Peter Wehrwein of Managed Healthcare Executive, “The CBO report, which came out in January, delves into some of the reasons for the rise in prescription spending. Starting in the mid-1990s, it was fueled in part by the advent of blockbuster drugs — drugs with over $1 billion in annual sales — for common conditions: statins for high LDL cholesterol, ACE inhibitors for high blood pressure, antidepressants for depression and other mental health conditions.”

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(Source: Managed Healthcare Executive, March 3^rd, 2022)