Retirees and Prescription Drugs
Christopher R. Hulla
Principal and Benefit Consultant
Buck Consultants

Prescription drug usage is increasing and will continue to increase as the population ages. Prescription drug usage, however, can help reduce total health care costs, according to Chris Hulla, a health care consultant.

In 2001, according to Hulla, Americans spent $192 billion on prescription drugs. That figure will double by 2011. But research shows that increased drug use may help decrease hospital and other medical costs. Although prescription costs grew from 11 to 16% of claims, hospital costs dropped from over 40% to less than 30%.

There is increasing concern about the relationship between pricing and profit margins among pharmaceutical companies, Hulla noted. Health purchasers are responding most often by establishing buying cooperatives. Others are stepping up testing compliance to ensure that plan members likely to suffer from a particular disease receive regular testing for it.

Congress is investigating these companies’ profits and looking into why pharmaceuticals cost substantially less in Canada and other countries. Hulla predicated state and federal governments will approve more legislative responses to concerns about prescription drug prices. Such proposals could include accelerating the generic drug approval process, eliminating patent extenders and establishing multi-state purchasing pools.

Hulla is Buck Consultants' practice leader in the Health and Welfare Department.  He has extensive experience in health care consulting, health plan design and costing, and postretirement and postemployment actuarial valuations.

© 2003 National Conference on Public Employee Retirement Systems

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