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The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary (2002)

Chapter: Appendix III: Purchaser Payer Background Information

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Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
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Appendix III
Purchaser Payer Background Information

Vanessa Walker

In 1999, the United States spent $1.2 trillion on health care, up 5.6% from the previous year.1 Growth in health care expenditures is estimated to increase 8.3% in 2000 and 2001. Total spending on health insurance premiums was $401 billion in 1999, up 6.5% from the previous year. Total spending for clinical research is estimated at over $13.4 billion for 2000.2 This estimate includes private sector spending on phase I-IV clinical trials ($6.7 billion in 1999) and NIH reported clinical research spending. Of the $5.3 billion NIH spends on clinical research an estimated $1.9 billion is spent on clinical trials. Other government agencies add at most $1.4 billion dollars (including: Veterans Affairs, Department of Defense, Agency for Healthcare Research and Quality, Centers for Disease Control, Health Resources and Services Administration, and Centers for Medicare and Medicaid Services, and Food and Drug Administration).

A recent New York Times article noted that large insurance companies observed medical cost increases of 10 to 15 percent in Q1 2001 roughly more than double the 5-6 percent increase seen in the past decade.3 Preliminary estimates from Hewitt Associates show that HMOs are requesting premium in

1  

Heffler S, Levit K, Smith S, Smith C, Cowan C, Lazenby H, and Freeland M. Health Spending up in 1999; Faster Growth Expected in the Future. Health Affairs 20(2): 193–232. 2001

2  

PHRMA. Pharmaceutical Industry Profile 2001. Washington, DC: 2001

3  

Milt Freudenheim. “Medical Costs Surge as Hospitals Force Insurers to Raise Payments.” New York Times, 5/25/01.

Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
×

creases averaging 18.3 percent, with some proposed increases reaching as high as 60 percent.

In 1999, Health Affairs reported health insurance premiums increased 6.5% in 1999, faster than the period between 1993 and 1998, which averaged 5.0% annual growth. In that same year, health insurance premiums totaled $401.2 billion spent on health, while $355.3 billion was spent on benefits. The article predicted that premiums would continue to increase 9.3% in 2000, and 10.5% in 2001. During this period, it was believed that premium growth would surpass benefit growth.4

Also noted in the article, hospitals are requesting double-digit rate increase from insurers due to growing labor and utility costs in 2000 and 2001. Insurers are, in turn, passing additional costs from hospitals and other providers to employers in the form of increased premiums averaging 18%.

Spending on prescription drugs rose 16.2% in 2000.5 The fastest-growing categories of drugs in terms of number of prescriptions written were antihistamines (18.4% increase), cholesterol-lowering drugs (18.1%) and antidepressants (11.3%). Factors influencing health care costs include:

  • Aging population

  • Diminished competition (mergers of providers and insurers)

  • Increased medical inflation

  • Increased prescription drug costs

  • Strong demand for medical services

  • Growth in technology including information technology investments

The top disease categories based on cost or utilization indicators include: Cancer, Ischemic heart disease, Congestive Heart Failure, Injury, Complications of Medical and Surgical care, Complications of Pregnancy, Psychiatric Conditions, and Asthma (Table 1).

A survey of 20 licensed HMO plans that published research in the public domain and had a specific infrastructure to support research, had 1996 revenue of $92 million and employed 1,273 staff.6 The selected plans covered more than 29 million members. Research conducted by these entities included health services, epidemiology, health economics, and clinical trials. The plan or parent organization and NIH were the largest source of funds (24% and 22%, respectively).

4  

Heffler, et al.

5  

Express Scripts. Express Scripts 2000 drug trend report. St. Louis. MO: June, 2001

6  

Neslon AF, Quiter ES, Solberg LI. The state of Research within Managed Care Plans 1997 Survey. Health Affairs 17(1): 128–138.

Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
×

TABLE 1 Ranking of Top 16 Principal Diagnosis Disease Cohorts*

Condition

Ranking of Total allowed dollars

Ranking of Total allowed dollars per patient per year

Ranking of Admits per patient per year

Ranking of ER visits per patient per year

Cancer

1

2

10

16

Ischemic Heart Disease

24

4

1

2

Other Heart Disease

35

5

1

1

Injury

4

13

15

1

Congestive Heart Failure

5

1

1

8

Diabetes

6

10

9

6

Congestive Obstructive Pulmonary Disease

7

9

7

7

Complications of Medical and Surgical Care

8

3

3

5

Arthropathies

9

14

13

14

Dorsopathies

10

12

14

9

Psychiatric conditions

11

11

12

4

Disease of Liver, Pancreas

12

8

8

10

Disorder of Female Genital Organs

13

16

16

15

Cerebrovascular Disease

14

6

6

13

Complication of Pregnancy

15

7

2

3

Asthma

16

15

11

2

*Data from a large Commercial and Medicare+Choice HMO population in 2000 in the southeastern United States. Members may appear in more than one category.

Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
×
Page 94
Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
×
Page 95
Suggested Citation:"Appendix III: Purchaser Payer Background Information." Institute of Medicine. 2002. The Role of Purchasers and Payers in the Clinical Research Enterprise: Workshop Summary. Washington, DC: The National Academies Press. doi: 10.17226/10400.
×
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In a workshop organized by the Clinical Research roundtable, representatives from purchaser organizations (employers), payer organizations (health plans and insurance companies), and other stakeholder organizations (voluntary health associations, clinical researchers, research organizations, and the technology community) came together to explore:

  • What do purchasers and payers need from the Clinical Research Enterprise?
  • How have current efforts in clinical research met their needs?
  • What are purchasers, payers, and other stakeholders willing to contribute to the enterprise?

This book documents these discussions and summarizes what employers and insurers need from and are willing to contribute to clinical research from both a business and a national health care perspective.

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