NACDS finds shift in Rx drug spending post Medicare Part D

January 21, 2008

NACDS economist finds Medicare Part D caused shift in Rx drug spending

An article in the December/January edition of Health Affairs, co-authored by the National Association of Chain Drug Stores Senior Economist Laura Miller, revealed a major shift of prescription drug spending and volume from Medicaid to Medicare following the implementation of the Medicare Part D benefit in 2006. The article, "Changes in Medicaid Prescription Volume and Use in the Wake of Medicare Part D Implementation," examines the impact of Medicaid prescription spending and volume, generic dispensing rates, and a shift in the mix of drugs used by Medicaid beneficiaries. The study found that total payments to pharmacies by Medicaid fell by nearly 50%—from $38.5 billion in 2005 to $20.9 billon in 2006. The number of Medicaid paid Rxs dropped 49% from 543 million to 278 million. The figures are a direct result of the shift of coverage for Rx drugs from Medicaid to Medicare. Generic dispensing rates in Medicaid programs increased dramatically—4.6 percentage points nationally-from 2005 to 2006. This jump reflects an increasing availability of generic drugs for common therapies in Medicaid and other drug benefit programs, and growing efforts to encourage more use of generics.

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