Discuss 1 area that you or someone close to you have seen these increases in costs.

Healthcare spending in the United States has continued to increase over the past several decades at a rate that far exceeds that of other nations. People have seen these increases on everything, from the cost of insurance premiums going up, to the costs of drug prices and office visits increasing. To familiarize yourself with some of the many areas and ways costs and spending are increasing, please review the NHE fact sheet.
Discuss 1 area that you or someone close to you have seen these increases in costs.
Examine these increased costs from the perspective of the leader of a healthcare organization. Consider the following:
Why do you feel there was an increase in the cost?
What, if anything, could have been done to react to the rise in costs and decrease their impact on the organization?
What can the organization do to help avoid these increases in the future?

ANSWER
Area of Increased Costs: Prescription Drug Prices

The cost of prescription drugs has been a major driver of healthcare spending in the United States. In 2021, prescription drugs accounted for $378 billion, or 9.2%, of total national health expenditures (NHE). This is up from $135 billion in 1990, or 4% of NHE.

Perspective of a Healthcare Organization Leader:

Reasons for Increased Drug Costs:

Rising research and development (R&D) costs: The cost of developing new drugs has increased significantly in recent years. This is due to the increasing complexity of drug discovery and development, as well as the length of time it takes to bring a new drug to market.

Patents and market exclusivity: Pharmaceutical companies have a monopoly on the sale of their brand-name drugs for a period of time, which allows them to charge higher prices. This price protection can last for decades for some drugs.

Increased use of generic drugs: The use of generic drugs has grown in recent years, as they are generally less expensive than brand-name drugs. However, the development of new generic drugs has slowed in recent years, as pharmaceutical companies have fewer incentives to invest in generic development.

Reactions to Rise in Costs and Decrease Their Impact:

Negotiating lower drug prices: Healthcare organizations can negotiate lower drug prices with pharmaceutical companies. This is often done through Pharmacy Benefit Managers (PBMs), which are intermediaries between healthcare organizations and pharmaceutical companies.

Promoting generic drug use: Healthcare organizations can promote the use of generic drugs by educating patients and pharmacists about generics. They can also incentivize the use of generics by negotiating lower copays for generic drugs.

Supporting policies that lower drug prices: Healthcare organizations can support policies that lower drug prices, such as allowing Medicare to negotiate drug prices.

Avoiding Increases in Drug Costs:

R&D funding: The federal government could provide more funding for R&D to reduce the reliance on private funding. This could help to lower drug prices by making them more affordable to develop.

Patent reform: The patent system could be reformed to make it more difficult for pharmaceutical companies to maintain monopolies on their drugs. This could help to make generic drugs more available and affordable.

Transparency in pricing: Pharmaceutical companies could be required to disclose more information about their drug prices. This would allow consumers and healthcare organizations to see how much they are paying for drugs and negotiate for better deals.