PROJECTING FUTURE DRUG EXPENDITURES - 1996

The use of information on inflation, pharmacoeconomics, generic compet ition, new drug entities, site-specific drug-use patterns, legislation , and the changing health care environment in the projection of drug e xpenditures is discussed. Drug price inflation has declined from 6.9% in 1991 to 2.1% for part of 1995. Much of the decline is attributable to deep discounts given by manufacturers to managed care institutions. Some marketing specialists are predicting that drug manufacturers wil l begin to scale back discounts. Pharmaceutical industry analysts proj ect that overall price increase for pharmaceuticals in the next 12-24 months will average 2.8% (range, 0-6%). Pharmacists need to be able to understand and critically evaluate pharmacoeconomic research, particu larly studies conducted by the pharmaceutical industry. Savings due to increases in generic product selection may be offset to some degree b y extensions of patent expiration dates under the General Agreement on Tariffs and Trade (GATT). Drug budget projections should include a co mplete review of new drugs and biotechnology agents pending FDA approv al, drugs pending approval for new indications, and common unlabeled u ses of expensive existing agents. Various methods are available for tr acking drug-use patterns in specific practice settings. When resources are limited, pharmacy managers may elect to target only high-cost dru gs; a proactive approach, such as projecting costs and developing guid elines for costly agents before their market release and before consid eration by the pharmacy and therapeutics committee, is advantageous. R elevant legislative activities in 1995 included reform proposals for M edicare, Medicaid, and FDA; the Federal Acquisition Streamlining Act; and GATT. Disease management and other approaches to pharmacy benefits have increased opportunities for cooperative arrangements between dru g companies and health care providers that may have major effects on d rug marketing and pricing. Combining information on inflation, pharmac oeconomics, generics, new drugs, practice-site drug-use patterns, fede ral legislation, and the changing health care environment is necessary for accurate projections of drug expenditures.