Tuesday, January 6, 2009

Nation's health spending rises, but not so much

Health care continued to take up a greater share of the economy in 2007, as spending on hospitals, doctors and other services increased 6.1 percent to $2.2 trillion. There was a silver lining in the numbers the government reported Monday: The increase in health spending was the smallest since 1998, thanks largely to the growing use of generic drugs. Officials worry that devoting more resources to health care makes it harder for families to meet other priorities and for businesses to compete internationally. Overall, health spending came to $7,421 per person for the year.

About 67 percent of medications dispensed in 2007 were generic drugs - up from 63 percent the year before. Generics can cost as little as one-third the price of brand-names. Several factors helped drive the trend. First, insurers are steering consumers to lower-priced medicines by charging low co-payments for certain drugs. Meanwhile, they charge higher co-payments for medicines they want consumers to avoid for safety and financial reasons.

Large retailers and grocers are enticing consumers into their stores with low-priced generics. Also, several blockbuster brand-name drugs lost their patent exclusivity in 2006, generating competition. Notable examples include Flonase, an allergy medicine; Zocor, a medicine used to lower cholesterol; and Zoloft, which is used to treat depression.
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