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October 9, 2002

Pharmacy Benefit Plans and Prescription Drug Spending

Author Affiliations

Author Affiliation: Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, Baltimore, Md.

JAMA. 2002;288(14):1773-1774. doi:10.1001/jama.288.14.1773

Health care costs are increasing rapidly again. A recent employer survey reported that health insurance premiums increased 12.7% from 2001 to 2002, the largest increase since 1990.1 The fastest rising component of health care costs is pharmaceuticals. From 1999 to 2000, national expenditures for prescription drugs increased 17.3% overall, and 19.6% for private insurance.2 Since the late 1990s, when prescription costs began rising more rapidly than other health care costs, employers have been working with their insurers and pharmacy benefit managers to develop prescription drug coverage plans that would better control costs. Many employers now offer 2- or 3-tier prescription drug coverage plans, with the amount of out-of-pocket cost increasing from bottom to top tiers. Although plans vary, the lowest tier usually includes the low-cost generic drugs, the second tier may include brand-name drugs for which no generic exists, and the third tier brand-name drugs for which generic substitutes do exist.