- The Washington Times - Monday, October 2, 2006

Consumers spent less on prescription drugs last year, causing health care spending to grow the same amount as previous years, according to a study released yesterday.

Consumer spending grew at an annual rate of 7.4 percent in 2005, according to the Center for Studying Health System Change, a policy research organization. The growth rate is 7.7 percent so far this year, based on spending data for the first quarter of 2006, the study said.

Last year, consumers increased spending on hospital care, physician services, home health agencies and ambulance services. The study attributes the increased spending to the recent economic recovery driving greater demand for hospital and physician services as well as last year’s severe flu season.

Spending on health care continues to be higher than overall U.S. economic growth, which reached 5.4 percent last year. Inflation rose 3.4 percent.

“We need to get that gap down to around 1 percent,” said Paul Ginsburg, president of the Center for Studying Health System Change. “Health insurance will be less affordable to more and more people, especially low-to-moderate wage workers and their employers.”

The increases were offset by a slowdown in spending on prescription drugs. Spending on prescription drugs grew at 4.8 percent last year, down from a 8.3 percent growth rate in 2004, and significantly less than a peak spending rate in 1999 of 18.4 percent.

The pharmaceutical industry, normally a contributor to higher health care costs, could be a factor in lowering costs in the near future as well, Mr. Ginsburg said.

For instance, patent protection for the blockbuster drug Zocor, a popular cholesterol-fighting drug, expired in June, and consumers are expected to save money on the drug once its generic competitors reach the market early next year.

The rapid expansion of specialty health care facilities such as hospitals that focus solely on expensive cardiac procedures and a continued increase in obesity in the U.S. are driving up costs in the health care system.

The Center for Studying Health System Change is based in the District and is funded principally by the Robert Wood Johnson Foundation, a health care philanthropy organization.

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