The public discussion about drug prices and expenses has focused on the rising costs. However, important parts of the conversation, specifically the actual out-of-pocket costs to patients, have been obscured by the complexities and lack of transparency of the current pricing system. The new report from the IQVIA Institute for Human Data Science provides context and clarity on the pricing of prescription medicines. The report includes information on the differing prices paid by different stakeholders and by patients with different kinds of insurance. Uniquely, the report combines prescription cost data with household income data to illustrate how affordability is a distinctly personal issue for patients and their families.
“Lower drug price growth and improvements in affordability to patients is a testament to the positive market dynamics of the American pricing system and the fact that manufacturers, health insurers and the intermediaries, such as wholesalers and benefits managers, have taken actions to reduce the burden of drug costs to patients,” said Murray Aitken, IQVIA senior vice president and executive director of the IQVIA Institute for Human Data Science. “The current pricing system is very complex, and understanding the amount spent on medicines requires considering a range of measures that apply to the different stakeholders in the drug chain, including manufacturers, payers, benefits managers, wholesalers and patients. We are hoping that our report will contribute to more transparency and understanding of the different levels of cost.”
Additional highlights of the Medicine Spending and Affordability in the U.S.: Understanding Patient Costs for Medicines report include:
- Total out-of-pocket costs for patients: A record $67 billion was paid out-of-pocket by patients for all prescriptions filled in retail pharmacies in 2019, up from $61 billion in 2015. This was mainly due to a higher volume of prescriptions, especially among those over 65.
- Out-of-pocket costs for Medicare patients: Medicare beneficiaries filling prescriptions under Part D are paying more out-of-pocket in total due to rising numbers of enrollees, and a larger share are paying more than $500 in annual costs.
- Medicare patients filling prescriptions under Part D paid $16.1 billion out-of-pocket in 2019, up 27% over the past 5 years. This is mostly due to the 8.3 million increase in population over 65 (18.2%) and 13.7% higher volume per person, offset by 5.2% lower per-prescription costs. The lower patient cost per prescription is due to the closing of the coverage gap, larger numbers hitting the “catastrophic” out-of-pocket threshold and greater use of generics.
- Annually, 90% of all patients pay less than $500 in out-of-pocket costs, but 20% of Medicare Part D patients pay more, in part due to their inability to offset costs through manufacturer coupons and plan design, as well as a greater disease burden and associated higher per capita medicine use by seniors.
- The cost of insulin: The cost of insulin to patients has been subject to much scrutiny and discussion of capping costs. Some patients filling prescriptions for insulin stand to benefit significantly from proposals to set a cap of $35 per prescription.
- Across all patients, the average out-of-pocket cost for an insulin prescription was $31 in 2019, down from a record high of $35.70 in 2015.
- Across all pay-types, 24% of prescriptions carried an out-of-pocket cost of more than $35, but 31% of Medicare and 58% of cash payments reached this level, compared to 22% for those commercially insured. This reflects plan design and cash costs that are based on list prices.
- If all patients nationally had insulin costs capped at $35 — per the Medicare Part D senior savings model for 2021 and some state plans — patients would have saved $837 million in out-of-pocket costs in 2019, including $279 million by Medicare beneficiaries, $326 million by the uninsured paying cash and $233 million by those with commercial insurance.
- Patient cost sensitivity: A growing public health concern is patients abandoning their new prescriptions and not following the physician’s recommendation for care. Abandonment occurs much more often at higher levels of patient out-of-pocket cost.
- In 2019, 9% of all new prescription starts were abandoned at retail pharmacy, representing patient care recommended by a physician but not received by the patient.
- While abandonment rates are less than 5% when the prescription carries no out-of-pocket cost, it rises to 45% when the cost is over $125 and 60% when the cost is over $500.
- In the case of diabetes, anticoagulants and oral cancer drugs, the average abandonment rate is 18% of all new therapy starts because more of these drugs carry higher costs.
The full version of the report, including a detailed description of the study methodology, is available at www.iqviainstitute.org/USMedsAffordability. The study was produced independently as a public service, without industry or government funding.