42% of drug spending comes from private plans
Rising drug costs continue to be an issue in the U.S., helping drive up overall health spending for both private health insurance and public programs such as Medicare and Medicaid. Together, private health insurance, Medicare and Medicaid accounted for 82% of total prescription drug spending in the U.S. in 2017, according to a recent analysis from the Kaiser Family Foundation that broke down drug spending that year.
The report comes as the Trump administration has made recent moves to clamp down on sky-rocketing prescription drug costs, including requiring drugmakers to publish the list prices of their products in TV advertisements.
Patients paid 14% of total spending in out-of-pocket costs. Private insurance alone accounted for 42% of drug spending that year, while Medicare costs were 30% and Medicaid was 10%.
Interestingly, only a small proportion of drugs contributed heavily to total drug spending, with the top five drug products making up 10% of total drug spending in large employer plans, Medicare Part D and Medicaid. The top 50 drug products accounted for about 40% of total prescription drug spending across the three health insurers. However, the costliest drugs for each type of plan, as well as which drugs users spent the most on out-of-pocket costs, differed.
A curative treatment for hepatitis C, Harvoni, was the drug product with the highest total spending in 2016 in Medicare Part D and Medicaid, KFF found, while Humira, a rheumatoid arthritis treatment, was the top product for private health insurance. Medicare Part D and Medicaid spent about $6.6 billion collectively on Harvoni, while private insurance covered $4.9 billion for Humira that year.
Treatment for hepatitis C is among the costliest per user in large employer plans and Medicare Part D, with costs of $70,000 or more in 2016. Sovaldi, another hep C treatment, has the same price tag per user, while cancer drugs have an annual cost of at least $60,000 per user.
The specific drugs that had the highest annual average out-of-pocket costs for users differed from large employer plans and Medicare Part D, but the types of drugs were similar, the analysis found, with users shelling out for products to treat cancer, multiple sclerosis and arthritis. In employer plans, Xyrem, a narcolepsy treatment, had the highest out-of-pocket cost at $1,568 on average. Harvoni was the most expensive drug product for Part D users, with more than $5,000 in annual out-of-pocket costs per user.
This difference was reflected across the board––Part D users had higher annual average out-of-pocket costs compared to those in large employer plans. Fortunately, spending by both groups was lower in 2016 compared to 2007.
See the full analysis here.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."