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Utilization Drives Up Drug Costs


While drug costs rose in 2013 by 3.5%, up from 1.4% in 2012, drug inflation was not the main reason. Instead, says the Green Shield Canada ‘2013 Drug Study,’ the cost driver was utilization, a result of claimants are getting older, getting sicker, and taking more drugs than ever. With workers living longer and staying in the workforce longer, it is costing private payer plans more and more. Lower-cost generic drugs, however, continue to be a positive factor. Ongoing drug reform and additional brand-name drugs coming off patent more than made up for slight increases in brand-name drug costs and dispensing fees. Generic penetration reached 58.3% in 2013, up from 55.5% in 2012. And this is despite an increase in ‘no substitution’ requests. When a ‘no substitution’ request is indicated on a prescription, the pharmacist has no choice but to dispense the higher-cost brand-name. Over the last five years, the number of these requests has doubled. Plan sponsors can combat this by having mandatory generic policies in place, it says, where the plan is only responsible for the cost of the generic. If the plan member wants the brand, the difference in cost comes out of their pocket.

Courtesy of Benefits and Pensions Monitor website News Alerts 

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