Drug Spending

During 2003, prescription drug expenditures rose by an average of 13.4 percent in the United States, according to data from Medco Health Solutions, Inc.

The fastest rising segment was high-cost “specialty” drugs for chronic conditions such as rheumatoid arthritis, infertility, multiple sclerosis and cancer. Expenditures on these drugs rose by 26.6 percent, almost double the average for all medications.

Total spending on specialty drugs is approximately $25 billion. With anticipated advances in biotech medical treatments, that figure is expected to top $40 billion by 2006.

The largest single category of prescription drug spending is central nervous system medications. These include drugs for attention deficit/hyperactivity disorder (ADHD). In total, this category accounts for 24.8 percent of all drug spending, just ahead of cardiovascular treatments.

Children under the age of 19 were the fastest rising age group for medication spending in 2003, the third year in a row that this age group led increases. Children’s medication spending climbed by 9.5 percent.

Benefit Costs

In addition to wages, most workers have a benefit package that includes vacation time, sick leave and, if they’re fortunate, a health insurance plan.

According to an Institute of Management and Administration report (April, 2004), taken together, the benefit packages of American workers averaged 42.3 percent of their total payroll in 2002, an increase of three percent from 2001. That comes to about $18,000 per worker.

Large companies had higher benefit packages than smaller ones. Companies with 100 or less employees paid an average of $14,031 for employee benefits.

Medical-related expenses were the largest category of employee benefits ($6,277 per worker). The second largest category was time not worked ($4,970). In this category, vacation accounted for $1,073 per employee.

[Steve Clark]