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EMEA Thought Leadership
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
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EMEA Thought Leadership
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
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EMEA Thought Leadership
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
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Medicine Spending and Affordability in the U.S.
Understanding Patients’ Costs for Medicines
Aug 04, 2020
About the Report
This report illustrates how drug prices and medicine affordability are distinctly personal issues for patients and their families. The analysis in this report uniquely combines prescription cost data with household income data from IQVIA, The Human Data Science CompanyTM, to provide information on the prices paid by various healthcare stakeholders and by patients with different kinds of insurance.
The public discussion around drug prices and medical expenses focuses on the rising costs of medicines and is riddled with complexity. This research can help breakdown those complexities and provide a more transparent view into the current pricing system, specifically as it concerns the actual out-of-pocket costs to patients.
Report Summary
Medicine spending at various reporting levels represent distinct stakeholder perspectives on the U.S. healthcare system. How much each stakeholder pays varies considerably, creating the contradiction that while the vast majority of patients face very low and declining medicine prices, some patients are facing dramatically unaffordable costs. This report examines overall levels of medicine spending and growth, dynamics for different stakeholders, trends in prices and out-of-pocket costs, and the distribution of those costs across patients filling prescriptions. Examining whether patients fill prescriptions (or don’t) provides an opportunity to gain an understanding of patient cost sensitivity, as 9% of prescriptions are abandoned — 5% when prescriptions are free, but 60% when they cost more than $500. Patient cost sensitivity is higher predominately when costs rise, however there are important differences by insurance type and by household income.
Key Findings
A record $67 billion was paid out-of-pocket by patients for all prescriptions filled in retail pharmacies in 2019, up from $61 billion in 2015.
Medicine Spending at Selected Reporting Levels, US$Bn
- Over the past five years, spending at list prices, i.e., Wholesaler Acquisition Cost (WAC), has increased from $477 billion to $671 billion — an average growth of 7.1% per year.
- Total net payer spending in 2019 was $509 billion and has increased at a CAGR of 4.1% over the past five years.
- Manufacturer net revenues from these sales, including all products, are estimated to have grown an average of 4.6% over five years and 5.2% from 2018 to 2019.
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 paying more than $500 in annual costs.
Aggregate Patient Out-of-Pocket Cost for Prescriptions and Value Offset by Coupons
- 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 an 8.3 million (18.2%) increase in the over-65 population along with a 13.7% increase from greater use of medicines and shifts to drug that may have higher out-of-pocket costs, offset by 5.2% lower per-prescription costs.
- The lower patient cost per prescription is influenced by the closing of the so called “donut hole,” larger numbers hitting the “catastrophic” out-of-pocket threshold, and greater use of generics.
- Ninety percent of all patients pay less than $500 annually 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 their plan design, as well seniors having a greater disease burden and an associated higher per capita medicine use.
Subsets of patients who fill prescriptions for insulin across varying pay types stand to benefit significantly from proposals to set a cap of $35 per month.
Average Insulin Final Out-of-Pocket Costs Across All Payers in US$ and Percentage of Prescriptions by Pay Type with Final OOP Cost Above $35
- Across all patients, the average out-of-pocket cost per month 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 per month, 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 month — 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.
A growing public health concern is patients abandoning their new prescriptions and not following a physician’s recommendation for care. Abandonment occurs much more often when patient’s have higher out-of-pocket cost.
14-day Abandonment Share of New-of-Product Prescriptions by Final Out-of-Pocket Cost in 2019, All Payers, All Products
- In 2019, 9% of all new prescription starts were abandoned at retail pharmacies, 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.
Medicine Spending and Affordability in the U.S.
There is a very public conversation about drug prices and costs occurring in the United States presently, but important parts of the discussion are obscured by the complexities and lack of transparency of the current pricing system.
