Growth in US spending on prescription medicines is projected to have slowed to 3.5% last year, down from 2007’s 4.9% rise, but is expected to rebound to 4% in 2009 even though growth in private prescription drug expenditure will continue to decelerate, according to new government forecasts.

The slowdown is due to many consumers filling fewer prescriptions or becoming more willing to switch to lower-cost generics as the effects of the recession start to bite, the Centers for Medicare and Medicaid Services (CMS) has reported. This year’s uptick will be due to double-digit growth in drug spending within the federal Medicare and Medicaid health insurance programmes, while private prescription expenditures will continue to decelerate due to the recession.

Prescription drugs are projected to be the fastest-growing component of expenditures within Medicare - the national health insurance programme for people aged 65 and over and those of any age with certain disabilities – and they will account for 14.7% of total spending by 2018 compared with 10.9% in 2007, says the report, which is published by the CMS Office of the Actuary and appears online in the journal Health Affairs.

The CMS forecasts that growth in national health spending overall will slow this year because of the recession, but it will still significantly outpace economic growth. Last year’s health spending growth is projected to have risen 6.1% to $2.4 trillion from $2.2 trillion in 2007, while growth in the economy, as measured by Gross Domestic Product (GDP), is put at 3.5%. This year’s health spending will increase 5.5%, against a drop in GDP of 0.2%, and health will increase as a share of GDP to 16.6% from 16.2% last year.

During 2008-18, annual health spending is expected to average 6.2%, compared to growth in the economy averaging 4.1%, and by 2018 the national health spend will reach $4.4 trillion and account for 20.3% of GDP, the agency forecasts.

Obama’s pre-Budget pledge on health insurance

Meantime, President Barack Obama has said that his administration’s first budget, to be unveiled today (February 26), will include “an historic commitment to comprehensive health care reform – a down-payment on the principle that we must have quality, affordable health care for every American.”

In his first speech to both Houses of Congress, given on Tuesday (February 24), the President added that next week he will bring together “businesses and workers, doctors and health care providers, Democrats and Republicans” to begin work on the issue of health care reform.

“I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year,” he told Congress.