Prescription Drug Prices for the Elderly

By Berndt, Ernst R.; Cockburn, Iain M. et al. | Monthly Labor Review, September 1998 | Go to article overview

Prescription Drug Prices for the Elderly


Berndt, Ernst R., Cockburn, Iain M., Cocks, Douglas L., Epstein, Arnold M., Griliches, Zvi, Monthly Labor Review


Recent research suggests that there is little difference in the rates of drug price inflation facing older and younger Americans, when age-related patterns of consumption are taken into account

Over the next few decades, the U.S. population aged 65 and older will grow, both in absolute numbers and as a share of the total population. As people age, they tend to have higher medical care expenses. Thus, an increasingly elderly society can be expected to devote a greater amount of its expenditures toward medical care. The implications of a graying society for future medical care expenditures will depend, of course, both on the price and on the quantity of future medical care for the elderly.

To the extent that they live on fixed incomes, the elderly are particularly vulnerable to price inflation. However, relatively little is known about the extent to which price inflation of the basket of medical care goods and services used by the elderly differs from the price inflation of the set of medical care goods and services used by younger Americans. To address this issue, we focus on elderly-nonelderly price inflation differentials for one component of medical care--namely, prescription pharmaceuticals--from 1990 to 1996.(1)

Background and concepts

Elderly-nonelderly differentials in drug price inflation could reflect brand-generic consumption proportions that vary by age. For treatment of acute conditions, the elderly may be more fragile, and prudent medical practice might suggest prescribing for them the newest generation of drugs having the fewest side effects, the least adverse drug interactions, and the most convenient dosing. Thus, for certain acute conditions, one might expect the elderly to be disproportionate users of newer, branded drugs. To the extent that such drugs increase in price more rapidly than older off-patent and generic drugs, the cost of the elderly's bundle of drugs would be expected to increase more rapidly than that of the young.

Although the same considerations would apply for treatment of chronic conditions, the surviving elderly are more likely to be using older drug products, because physicians are hesitant to change medications when an existing drug regimen is working well in treating a chronic condition. With "stickier" usage patterns and by surviving to old age, the elderly would therefore disproportionately use older drugs to treat their chronic conditions, drugs that are more often available as generics. Under this hypothesis, price inflation for the elderly's bundle of drugs would be less than that for bundle purchased by the young. We examine both these hypotheses empirically, focusing on three therapeutic classes--antibiotics, antidepressants, and calcium channel blockers.

The systems by which prescription pharmaceuticals are distributed and paid for in the United States are complex and rapidly changing. We assess elderly-nonelderly price differentials at three different points in the distribution chain: (1) the initial point, involving sales from manufacturers to wholesalers, retailers, and hospitals; (2) an intermediate point, retail sell-in, at which retail pharmacies acquire prescription drugs from wholesalers and manufacturers; and (3) a final point, retail sell-out, at which retail pharmacies dispense and sell prescription drugs to patients. At the retail sellout point in the distribution chain, we attempt--to the extent that available data permit--to distinguish consumers' out-of-pocket expenditures for pharmaceuticals from those expenditures involving government funds (medicaid and various public assistance programs), as well as from payments by private third-party insurance sources (fee-for-service insurance plans and various forms of medigap and managed care).

Medical expenditures. Prescription drugs accounted for 6.1 percent of U.S. national health expenditures in 1996. The share of prescription dollar sales occurring at the retail level fell from 64 percent in 1990 to 57 percent in 1996, even as the mall-order share increased from 5 percent to 9 percent. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Prescription Drug Prices for the Elderly
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.