Out-of-Pocket Burden for Prescription Drugs Down

Daniel Weiss, Senior Editor
Published Online: Tuesday, February 21, 2012
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The portion of nonelderly Americans spending more than a tenth of their income on out-of-pocket drug costs has dropped, but millions still meet the threshold.



Americans’ out-of-pocket financial burden for prescription drugs has dropped, but drug costs still take a toll on those with lower incomes or who are on public insurance, researchers reported in the February 2012 issue of Health Affairs. In fact, as of 2008, more than 8 million nonelderly Americans lived in families with a high drug-cost burden.
 
Led by Walid F. Gellad, MD, MPH, an assistant professor of medicine at the University of Pittsburgh School of Medicine and an adjunct scientist at the RAND Corporation, the researchers analyzed data on individual drug spending from 1999 to 2008 by people under 65 tracked by the federal Medical Expenditure Panel Survey.
 
They found that the portion of people who faced a high financial burden for prescription drugs—defined as spending more than 10% of total income on out-of-pocket drug costs—increased from 1999 to 2003 and then generally fell from 2003 to 2008. In 1999, 2.9% of nonelderly Americans (7.1 million people) lived in families that fell into this category, rising to 4.3% (10.8 million people) by 2003 and decreasing to 3.1% (8.3 million people) in 2008.
 
People’s likelihood of facing a high financial burden for prescription drugs varied depending on their type of insurance. In 2008, 7.5% of those on public insurance faced a high financial burden, compared with 4.5% of those who purchased private non-group insurance and 1.2% of those with private group or employer insurance. The poor and those with chronic conditions were also much more likely to face a high financial burden, with 13.6% of the poor and 13.1% of those with diabetes meeting the threshold in 2008. These numbers are particularly disturbing given the likelihood that these patients may forgo necessary medication in order to cut costs, according to the researchers.
 
The general trend toward a lower drug-cost burden came as the number of prescriptions per person in the survey actually increased, from 9.5 in 1999 to 13.1 in 2008. The key driver to the reduced financial burden was the increased use of generic drugs, which was itself driven by changes in pharmacy benefit design, the introduction of fewer new drugs, and loss of patent protection for several blockbuster drugs. During the period covered by the study, the portion of prescriptions filled with generic drugs soared from 39% in 1999 to 56% in 2008.
 
Although the portion of people on public insurance facing a high cost burden remained high in 2008, at 7.5%, this was down sharply from 11.1% in 2003. The researchers speculate that the drop is most likely due to changes in Medicaid, including the addition of preferred drug lists and increased use of prior authorization, but note that these trends may shift as state Medicaid agencies search for ways to reduce their budgets, including potential increases in prescription drug copays or implementation of other restrictions on drug usage.
 
The researchers also point out that the greater cost burden faced by those covered by private non-group insurance compared with those covered by group insurance is particularly relevant given that the 2010 Affordable Care Act aims to extend health coverage to 24 million people via non-group insurance policies.
 
"There is the expectation that future non-group policies will provide better, more generous drug coverage than existing policies, but the level of generosity remains to be seen,” Dr. Gellad said in a press release.
 
The study also looked at the portion of people living in  families in which out-of-pocket prescription drug spending accounted for more than half of all out-of-pocket drug spending and found similar trends over the period studied within groups segmented by insurance type and demographics.
 
To read the study abstract, click here.

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