Prescription Drug Spending is Decreasing


While out-of-pocket spending is decreasing, many are spending over $1000 per year on prescription drugs.

A recent analysis from Kaiser Family Foundation found that out-of-pocket spending on prescription drugs is decreasing, but many individuals are still spending upwards of $1000 per year.

Healthcare costs are a concern for most individuals. Higher deductible plans that have larger premiums can leave some individuals with a choice between obtaining medical care or affording other bills.

Foregoing healthcare has been found to be a popular way to save money, especially among individuals born between 1980 and 1997. These younger individuals are likely to skip wellness checks, follow-up appointments, or preventative screenings to prevent out-of-pocket costs.

These methods may actually do the opposite, and have the potential to raise healthcare costs down the line. In the current study, researchers analyzed claims information from the Truven Health Analytics MarketScan Commercial Claims and Encounters Database. Included in the study were 785,000 claims in 2004, and more than 15.3 million in 2014.

Researchers discovered that annual out-of-pocket spending on these drugs decreased from $167 in 2009 to $144 in 2014. This decline was likely due to a large increase in generic uptake that resulted in expiring patents.

This trend continued well into 2014 with almost two-thirds of the decline attributable to the Affordable Care Act, according to the report. The Affordable Care Act provision that made the biggest impact was the rule that a majority of insurers cover contraceptive at no cost to the patient.

Women were also more likely to spend less than men on prescription drugs, likely due to no-cost sharing for contraceptives. The researchers discovered that after this provision was implemented, the amount of patients paying out-of-pocket for contraceptives decreased from 22% in 2012 to 3.7% in 2014.

During this same period of time, an increasing number of people started spending more than $1000 annually for prescription drugs. This patient population grew from 1% in 2004 to 2.8% in 2014, which accounted for 33% of all out-of-pocket spending on prescription drugs by individuals in large employer health plans, according to the report.

Patients spending more than $1000 out-of-pocket on prescription drugs tend to be older compared with those who spend less. Individuals spending more than $2000 out-of-pocket per year also increased from 0.1% in 2004 to 0.6% in 2014.

Patients diagnosed with conditions such as blood-related diseases, cancer, digestive diseases, circulatory conditions, and endocrine disorders, were more likely to have higher spending on prescription drugs. Researchers found that 70% of patients with high out-of-pocket spending on prescription drugs have diabetes, obesity, or another endocrine disorder. Only 27% of patients with these disorders have out-of-pocket spending less than $1000.

These individuals are also more likely to be taking pain medications, hormones, insulin, and cardiovascular drugs, according to the report.

The amount of patients with high retail drug spending more than $5000, including insurance and out-of-pocket payments, increased from 1.6% in 2004 to 3.9% in 2014. Patients with exceptionally high spending above $20,000 increased from 0.1% to 0.8% during this time as well.

High healthcare costs have caused different stakeholders to point the finger at one another, each claiming that high out-of-pocket spending is not their fault. Insurers point to specialty drugs as the reason for increasing premiums, and drug manufacturers point to increased regulatory and manufacturing costs.

Despite the findings suggesting that a majority of individuals are actually paying less out-of-pocket on prescription drugs, high deductibles and large premiums may leave some individuals feeling like this is not the case.

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