The boffins at the Centers for Medicare & Medicaid Services (CMS) just released the 2009 computations of National Health Expenditures (NHE), including the latest data for prescription drugs.
Total NHE grew by only 4.0%, the slowest rate in five decades and below the 5.7% growth rate predicted for 2009 by CMS only last February. Alas, the slowdown occurred because of the economy, not healthcare reform. As Carl Mercurio of the Corporate Research group wittily notes in his blog: To Slow Healthcare Spending Growth, Destroy the Economy.
In 2009, total NHE for retail prescription drugs were $249.9 billion in 2009, up 5.3% versus 2008. A few intriguing observations from my number-crunching:
- Retail prescription drug prices, as measured by the Consumer Price Index for prescription drugs, rose 3.4% in 2009. Thus, real (inflation-adjusted) growth in drug expenditures was only 1.9%.
- Public funds continue to crowd out private payers.
- Medicare drug expenditures grew by 8.8%, while private health insurance grew by 5.1%.
- Consumer out-of-pocket payments grew by only 2.2%.
- Hooray! CMS' prediction of 5.2% growth from last February was pretty close to the actual rate, breaking their multi-year streak of poor forecasts. (See Drug Forecasts: Oops!...They Missed It Again.)
Read on for details and charts. Note that the NHE totals are net of manufacturer rebates, so the reported figures are lower than prescription sales of retail pharmacies. Policy wonks should check out the methodological note at the bottom for details.
Please note that the discussion of the Medicare growth rate was updated on January 13 based on comments from CMS. See below for details.
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Starting tonight, the big 3 drug wholesalers and the Big 3 Pharmacy Benefit Managers (PBMs) will begin reporting their latest quarterly financial results. These financial reports and accompanying conference calls provide invaluable insights into the strategies and economics of companies within U.S. drug channels.
