Generic Drugs Easing Out-of-Pocket Medical Costs in U.S.

WEDNESDAY Feb. 8, 2012 -- More Americans are buying the generic forms of medications, and this practice has made their prescriptions more affordable, according to a new report.

But even though some out-of-pocket drug costs may have declined, paying for prescription drugs remains an obstacle for people with low incomes, public insurance and those with chronic conditions such as diabetes, high blood pressure and mental disorders, noted the researchers at RAND Corp., a nonprofit research organization.

"Our findings are evidence of the success of strategies already in place to help lower the cost of medications for consumers, even during a period when medication use was increasing," study leader Dr. Walid Gellad said in a RAND new release. "But the burden of drug costs remains high for many Americans, which is an important issue for policymakers to consider as health reform extends insurance coverage to more people."

The study, published in the February edition of Health Affairs, revealed that more than 8 million nonelderly Americans faced a significant cost for their prescription drugs in 2008, with one in four allocating more than half of their total out-of-pocket medical expenses to prescription drugs, the investigators found.

"Because medications are a large part of the household health budget, they are obvious targets for households when they need to decrease their health expenses, which can have adverse consequences down the road," noted Gellad, who also is an assistant professor of medicine and health policy at the University of Pittsburgh, a staff physician at the Pittsburgh VA Medical Center, and a researcher with the VA Center for Health Equity Research and Promotion.

In conducting the study, RAND researchers examined the individual drug spending of those tracked by the federal Medical Expenditure Panel Survey from 1999 to 2008. They found the percentage of people with a high financial burden for prescription drugs has been volatile, increasing from 1999 to 2003, decreasing from 2003 to 2007, and slightly increasing again in 2008.

From 1999 to 2003, the percentage of nonelderly Americans who spent more than 10 percent of their income on prescription drugs rose from 3 percent to 4 percent. During that timeframe, the percentage of Americans with family out-of-pocket drug costs that accounted for more than half of their total out-of-pocket medical expenses also increased from 27 percent to nearly 34 percent.

The researchers also revealed that by 2008, however, these numbers dropped back down to 3 percent for families with a high drug-cost burden and 25 percent for families with drug costs that accounted for more than half of all out-of-pocket health care costs.

Family income and types of insurance played a significant role in Americans' drug-cost burden, the study showed. In 2008, the percentage of people living in families with considerable drug costs was 7.5 percent among those with public insurance and 4.5 percent among those with privately purchased individual health plans.

Those who fared the best were those with group or employer-related insurance. Only 1.2 percent of those Americans faced a high drug-cost burden.

"These differences are important as the Affordable Care Act will expand coverage to 24 million people through new health insurance exchanges that build on the nongroup insurance market," Gellad said. "There is the expectation that future nongroup policies will provide better, more-generous drug coverage than existing policies, but the level of generosity remains to be seen."

More information

The U.S. Food and Drug Administration has more about prescription drug costs.

Posted: February 2012


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