The Urban Institute just issued a study that sheds new light on the persistent and vexing problem of access to prescription drugs in the U.S. Working with data from a recent Medical Expenditure Panel Survey, researchers concluded that in the pre-COVID years 2018-2019 almost 13 million American adults either did without needed medications or held off on getting them due to cost constraints.
That’s a shocking figure coming almost a decade after passage of the Affordable Care Act and more than 15 years after prescription drug coverage was added to Medicare. Details of the report are equally unsettling: 25.4% of Medicare beneficiaries and 5.3% of privately insured adults spent more than 1% of their family income on individual out-of-pocket prescription expenditures, while more than 3% of Medicare recipients — and nearly 7% of beneficiaries with unmet prescription drug needs — spent more than 10% of their family income on prescriptions. Unmet medication needs were most common among women, low-income people and individuals with more than one chronic condition.
“It’s tragic that millions of people don’t take needed prescription drugs because they can’t afford them,” says Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation (RWJF), which provided financial support for the Urban Institute’s study. “As we recover from COVID-19 and try to create a more equitable society, ensuring that prescription drugs are affordable must be a policy priority.”
Making those life-saving and life-enhancing products available to all Americans who need them at a cost they can afford is imperative, and proponents of that position, including the Urban Institute and RWJF, can be expected to do everything they can to ensure that the issue remains high on the agenda of legislators and policy makers. The debate over the need to expand access to prescription medications should not, however, be conflated with the related question of how to rein in overall health care costs.
Totaling $369.7 billion in 2019, retail prescription drug spending accounted for a significant part of the nation’s health care bill. That substantial sum, coupled with the difficulty so many Americans are experiencing with out-of-pocket drug costs, has made the pharmaceutical industry a lighting rod for public anger about the economics of health care. That’s understandable, but the issue should be put in perspective.
A close look at health care spending data from the Centers for Medicare and Medicaid Services shows that retail prescription drug costs accounted for just 10% of total health care expenditures in 2019. While expenditures in the category rose 5.7% (considerably faster than the 3.8% increase the prior year), CMS attributed the change to higher utilization. Prescription drug prices actually declined 0.4%, following a 1% decrease in 2018.
The other major categories — hospitals and physician and clinical services — each accounted for a much higher share of health care spending. Thirty-one percent of total resources, or $1.2 trillion, were devoted to the former segment, while the latter accounted for 20%, or $772.1 billion. Hospital spending rose 6.2% in 2019; physician and clinical services saw a 4.6% increase.
With 17.7% of the U.S. economy, or $3.8 trillion, related to health care prior to the beginning of the COVID pandemic, there are clearly many areas that should be examined in an effort to enhance the accessibility, affordability and effectiveness of the system. If that exercise is to produce meaningful results, health care must be viewed holistically. An analysis should be based on what’s best for the patient, not the provider; the most efficient way to deliver high-quality care at the lowest possible cost; and the impact of a given intervention on the entire system.
Seen in that light, prescription medications and the pharmacy care that accompanies them represent a compelling value proposition. The ability of the products to address a broad range of health issues and lessen the need for more costly forms of treatment results in a high return on investment. The benefits to both patients and society of empowering a person to stay out of the hospital or avoid surgery are apparent, and must be weighed in the balance when considering how health care resources are allocated.
None of which diminishes the importance of the struggle with out-of-pocket drugs costs that so many people continue to endure. Rather, it is meant to warn against making prescription drugs the scapegoat for cost problems in a dauntingly complex system when, in fact, they deliver very solid returns.
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