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US health care spending increased 5.3 percent to $3.0 trillion in 2014. On a per capita basis, health spending was $9,523 in 2014, an increase of 4.5 percent from 2013. The share of gross domestic product devoted to health care spending was 17.5 percent, up from 17.3 percent in 2013. The faster growth in 2014 that followed five consecutive years of historically low growth was primarily due to the major coverage expansions under the Affordable Care Act, particularly for Medicaid and private health insurance, which contributed to an increase in the insured share of the population. Additionally, the introduction of new hepatitis C drugs contributed to rapid growth in retail prescription drug expenditures, which increased by 12.2 percent in 2014. Spending by the federal government grew at a faster rate in 2014 than spending by other sponsors of health care, leading to a 2-percentage-point increase in its share of total health care spending between 2013 and 2014.

Background The Pharmaceutical Benefits Scheme (PBS) is Australia’s national drug subsidy program. This paper provides a practical guide to researchers using PBS data to examine prescribed medicine use. Findings Excerpts of the PBS data collection are available in a variety of formats. We describe the core components of four publicly available extracts (the Australian Statistics on Medicines, PBS statistics online, section 85 extract, under co-payment extract). We also detail common analytical challenges and key issues regarding the interpretation of utilisation using the PBS collection and its various extracts. Conclusions Research using routinely collected data is increasing internationally. PBS data are a valuable resource for Australian pharmacoepidemiological and pharmaceutical policy research. A detailed knowledge of the PBS, the nuances of data capture, and the extracts available for research purposes are necessary to ensure robust methodology, interpretation, and translation of study findings into policy and practice.

Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction—the wedge between the availability of comparative information and consumers' use of it—is inconsequential because when information is readily available, consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step—providing the information rather than having consumers actively access it—had an impact. Plan switching was 28% in the intervention group, versus 17% in the comparison group, and the intervention caused an average decline in predicted consumer cost of about $100 a year among letter recipients—roughly 5% of the cost in the comparison group. Our results suggest that comparison friction can be large even when the cost of acquiring information is small and may be relevant for a wide range of public policies that incorporate consumer choice.

Background: Copayments (copays) for prescription drugs are a common policy among state Medicaid programs. Research exploring the effects of copays on pharmacy and health care utilization in Medicaid patients is limited, especially among patients with chronic disease. Objectives: The goal of this research was to quantify the impact of a copay policy for prescription drugs on medication and health services utilization overall and among subjects with several common chronic diseases enrolled in a state Medicaid program. Research Design: Using aggregated pharmacy claims, segmented linear regression models were used to evaluate changes in overall and disease-specific pharmacy utilization after implementation of a copay policy. Trends in emergency department encounters, office visits, and hospitalizations were used to evaluate the impact of this policy on unintended consequences. Utilization among cohorts of patients with several chronic conditions were analyzed to determine if a differential response existed by drug indication. Results: After copay implementation, utilization of prescription drugs declined significantly by 17.2% (P < 0.0001). This pattern was observed at varying degrees for all drug classes investigated. Rates of emergency department encounters, office visits, or hospitalizations did not increase after the policy was introduced. Subjects with diabetes, respiratory disease, and schizophrenia immediately reduced their use of nonindicated drugs significantly more than drugs indicated for their condition. Conclusions: Among Medicaid recipients, nominal copays are associated with significant reductions in use of clinically important drug classes. However, patients with chronic disease exhibited a differential response depending on the disease indication of the drug class.

Policymakers are considering legislation that would address several well-known problems with the PBM industry. But the bills might not substantially reduce prescription drug spending in the United States.

Despite the importance of patient insurance in the market for prescription pharmaceuticals, little is known about the impact of patient reimbursement on the pricing behavior of pharmaceutical firms. I examine the link between potential patient out-of-pocket expenses and pharmaceutical pricing using a unique policy experiment from Germany. Starting in 1989, a maximum reimbursement for a given medicine replaced a flat prescription fee. This change in reimbursement exposes the patient to the price of a prescribed product. Using a product-level panel dataset covering several therapeutic categories before and after the policy change, I find that producers significantly decrease prices after the change in potential patient out-of-pocket expenses. Price declines are most pronounced for brand-name products. Moreover, branded products that face more generic competitors reduce prices more.

If national health insurance becomes a reality, what options should be considered for the coverage of prescription drugs? The authors-whose Pills, Profits, and Politics has had a dramatic effect on physicians, pharmacists, patients, and the drug industry as well as on federal and state legislators-insist that the major objective must be the best possible health care. But holding down costs to patients and taxpayers must also be a goal. To complicate matters further, the advantage of each likely option-including price controls, the use of formularies, drug utilization review, patient cost-sharing, and the use of low-cost, generic-name products-is offset by a disadvantage, even a danger. If drug prices are slashed too much, the industry will lose many of its incentives to develop better drugs for the future. Particular attention is focused on the so-called drug lag-the lengthy delays in licensing of new drugs, even after they have been used with apparently good results in other countries. Pills and the Public Purse also addresses the seldom-appreciated fact that investing tax dollars in needed drugs may save taxpayers in the long run by minimizing unnecessary physician visits and hospitalization. Pills and the Public Purse challenges Congress and such agencies as the Food and Drug Administration and the Health Care Financing Administration to enact policies that put the interests of the public before those of government, industry, physicians, and pharmacists. This title is part of UC Press's Voices Revived program, which commemorates University of California Press's mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1981.