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WHEN GENERIC MEDICATIONS BEGAN ENTERING THE U.S. HEALTHCARE MARKET IN THE 1990s, MANAGED HEALTHCARE COMPANIES HELPED STEER A DUBIOUS PUBLIC TOWARD ACCEPTANCE USING SIGNIFICANTLY LOWER OUT-OF-POCKET COST AS INCENTIVES.
of healthcare and improve patient outcomes.
This is further evidenced in various disease states. According to a 1996 study by Frank R. Lichtenberg, break- throughs in antidepressants and anti- psychotics greatly reduced inpatient hospital admissions and length of stay, saving approximately $25 billion annually. Other studies conducted in the 1990s for AIDs and HIV treatment revealed that as costs for newer pre- scription drugs increased, overall cost of treatment (which included hospi- tal stays and emergency room visits) were greatly reduced.2
In addition, replacement of older drugs with newer drugs reduced overall healthcare costs. A follow- up study conducted by Lichtenberg and published in 2007 showed that,
in the entire population, a reduction in the use of mature drugs lowered non-drug medical expenditures 7.2 times as much as it increased drug expenditure. Reducing the mean age of drugs used to treat a condition from 15.5 years to 5.5 years was esti- mated to increase prescription drug spending by $18, but reduce other medical spending by $129, yielding
a $111 net reduction in total health spending. Lichtenberg attributed reductions in hospital expenditures ($80) and physician of ce visits ($24) as creating the most signi - cant impact on overall healthcare costs. In addition, newly developed medications typically curtailed the side effects of older drugs, which again impacted overall healthcare spending due to lower readmission
rates and emergency room visits.3 Despite a growing reliance on pre-
scription medications, the majority of Americans now have restricted or limited access to breakthrough and technologically advanced pharmaceu- ticals. This is due to “step therapy,”
a protocol used by pharmaceutical bene t managers and insurance companies to control prescription drug costs.
Many healthcare professionals, including prescribing providers and pharmacists, believe step therapy removes the decision-making power of doctors and their patients and places it in the hands of health in- surers and payers.
Others, including pharmaceutical bene t managers, managed health associations, health insurance com-
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