Trends and Indicators in the Changing Health Care Marketplace Section 1: Trends in Health Spending and Costs, Including Prescription Drugs
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Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.1: National Health Expenditures and Their Share of Gross Domestic Product, 1960-2004
Expenditures in the United States on health care were nearly $1.9 trillion in 2004, more than two and a half times the $717 billion spent in 1990, and more than seven times the $255 billion spent in 1980. The approximately $1.9 trillion in national health expenditures (NHE) in 2004 represents 16.0% of the Gross Domestic Product (GDP), three times larger than the industry’s share in 1960. About half of this increase occurred from 1980 to 1993, when health as a share of the GDP rose from 9.1% to 13.8%. Health care as a share of GDP remained roughly constant during the rest of the 1990s, began to rise fairly rapidly after 2000, but leveled off in 2004.
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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip).
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Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.2: National Health Expenditures per Capita, 1990-2004
Total health expenditures per capita were $6,280 in 2004, doubling (+123%) from $2,821 in 1990. The average annual increase in health expenditures per capita was 5.9% from 1990 to 2004.
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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip).
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.3: Percent Annual Increase in National Health Expenditures (NHE) per Capita vs. Increase in Consumer Price Index (CPI), 1980-2004
Growth in U.S. per capita health spending has been higher than the growth in the CPI since 1980. Changes in per capita health spending have for the most part corresponded to changes in CPI growth. Per capita health spending growth and CPI increases deviated from each other from 2000 to 2002 as per capita health spending growth accelerated and CPI increases declined. However, in 2004, per capita health spending growth dropped to 6.8% after peaking at a 12-year high of 8.0% in 2002, while CPI growth rose from 1.6% in 2002 to 2.7% in 2004.
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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip), and CPI data from Bureau of Labor Statistics at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt (All Urban Consumers, All Items, 1982-1984=100, Not Seasonally Adjusted, U.S. city average).
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.4: Annual Change in Private per Capita National Health Spending (Adjusted for Inflation), with Historical Health Spending Events, 1960-2004
The growth rate in the portion of national health expenditures paid from private funding has cycled upward and downward over the last forty years. During this period, public and private efforts to rein in accelerating costs through wage and price controls, voluntary hospital cost containment, and most recently through managed care and the threat of health reform have triggered sharp declines in private spending growth. But these periods of decline have always proven temporary and have been followed by rapid growth in costs. Average annual growth in private per capital health spending was 3.7% from 1960-2004.
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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2004; file nhegdp04.zip), and CPI data from Bureau of Labor Statistics at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt (All Urban Consumers, All Items, 1982-1984=100, Not Seasonally Adjusted, U.S. city average).
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Exhibit 1.5: Distribution of National Health Expenditures, by Type of Service, 1994 and 2004
While remaining the largest contributor to spending on health services overall, the proportion of national health expenditures devoted to hospital care declined from 34.1% in 1994 to 30.4% in 2004. In the same period, the share spent on prescription drugs almost doubled from 5.6% to 10.0% of health spending in the U.S.
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Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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Exhibit 1.6: Annual Percentage Change in National Spending for Selected Health Services, 1994-2004
While increases in drug spending tracked closely to increases in spending on other health services in the early 1990s, this pattern changed in the latter half of the 1990s and the early 2000s. From 1995 to 2000, increases in drug spending were two to five times larger than increases in spending on hospital care and physician services. This trend has moderated since 2000, with the prescription drug spending increase in 2004 falling to 8.2% compared to higher increases in physician and clinical services spending (9.0%) and hospital services spending (8.6%).
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Notes: With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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Exhibit 1.7: Relative Contributions of Different Types of Health Services to Total Growth in National Health Expenditures, 1994-2004
Hospital care contributed about one-quarter (26.4%), and physician services contributed about one-fifth (20.8%), of the total growth in national health expenditures between 1994 and 2004. Prescription drugs contributed 14.7% of the total spending growth over this period, although drug expenditures made up only 10.0% of total national health spending in 2004.
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Notes: Percentages may not total 100% due to rounding. Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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Exhibit 1.8: Distribution of Personal Health Care Expenditures by Source of Payment, 1994 and 2004
A variety of funding sources, both public and private, contribute to U.S. personal health care expenditures (that is, spending for health care services), and their relative shares have shifted over time. In recent years, expenditures by Medicaid (15.6% in 1994 and 17.4% in 2004) and Private Health Insurance (33.2% in 1994 and 36.1% in 2004) accounted for increasing shares of total payments. Although Consumer Out-of-Pocket spending per capita rose from $533 in 1994 to $788 in 2004, its share of expenditures declined from 17.6% to 15.1% over that time period; Medicare’s share declined from 19.9% to 19.2%.
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Notes: Personal health care expenditures are spending for health care services, excluding administration and net cost of insurance, public health activity, research, and structures and equipment. Out-of-pocket health insurance premiums paid by individuals are not included in Consumer Out-of-Pocket; they are counted as part of Private Health Insurance. Medicaid spending for the State Children's Health Insurance Program (which began in 1998) is included in Other Government Programs, not in Medicaid. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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Exhibit 1.9: Trend in Personal Health Expenditures by Source of Payment, 1980-2004
The private sector funds a greater proportion of personal health care spending than public payers, although the difference has narrowed since 1980. After a period of steady but slow decline from 1988 to 1996, the private sector's share of personal health expenditures (including health care services, but excluding research, structures and equipment, profits, and certain administrative costs) increased somewhat in 1997-1999, and then declined in the early 2000s, falling to 55.6% of health spending in 2004.
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Notes: Personal health care expenditures are spending for health care services, excluding administration and net cost of insurance, public health activity, research, and structures and equipment. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
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Exhibit 1.10: Per Enrollee Growth in Medicare Spending and Private Health Insurance Premiums (for Common Benefits), 1969-2003
Comparing common benefits, changes in Medicare spending in the last three decades has largely tracked the growth rate in private health insurance premiums. Typically, Medicare increases have been lower than those of private health insurance, except during the mid-1970s, the early 1980s, and mid-1990s. Trends in Medicare spending are affected by legislative changes such as the Balanced Budget Act of 1997, which contributed to the drop-off in Medicare spending growth in 1998 and 1999, and the Balanced Budget Refinement Act of 1999 and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, which contributed to increases.
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Medicare Spending
Private Health Insurance Premiums
1970
7.9%
15.5%
1971
9.4%
11.0%
1972
8.2%
10.9%
1973
3.9%
9.5%
1974
21.1%
16.2%
1975
18.6%
14.7%
1976
16.7%
20.6%
1977
14.4%
15.8%
1978
13.0%
10.9%
1979
13.5%
16.7%
1980
18.1%
15.5%
1981
17.6%
15.0%
1982
15.2%
12.9%
1983
11.7%
8.6%
1984
9.2%
8.2%
1985
6.1%
10.2%
1986
5.1%
4.9%
1987
6.1%
10.8%
1988
4.5%
14.7%
1989
9.4%
12.6%
1990
7.1%
13.0%
1991
6.7%
10.5%
1992
8.9%
7.8%
1993
5.4%
6.1%
1994
8.1%
2.0%
1995
6.7%
3.0%
1996
7.1%
1.5%
1997
3.8%
4.0%
1998
0.2%
4.4%
1999
2.5%
4.3%
2000
3.6%
6.4%
2001
8.6%
9.7%
2002
5.7%
9.5%
2003
5.1%
9.4%
2004
6.1%
9.0%
Average Annual Growth Rates by Period
Medicare Spending
Private Health Insurance Premiums
1970-2004
8.9%
9.9%
1970-1994
10.6%
11.6%
1994-1997
5.9%
2.9%
1997-2000
2.1%
5.0%
2000-2004
6.4%
9.4%
1994-2004
4.9%
6.1%
Notes: Per enrollee includes primary policy-holder plus dependents. Common benefits include hospital services, physician and clinical services, other professional services, and durable medical products; they exclude, for example, prescription drugs, home health care, non-durable medical products, and nursing home care. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
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Exhibit 1.11: Concentration of Health Spending in the Total U.S. and Family Populations, 2003
In 2003, 85% of the total civilian, non-institutionalized U.S. population had health care expenses, and 95% of all U.S. families had health care expenses. A small proportion of people (the top 1% of health care spenders) was responsible for much of the health care spending in this country in 2003, though the proportion was larger for individuals (22.3%) than for families (13.9%). The bottom 50% of the population had few or no health care expenses – only 3.4% of individuals and 7.8% of families were responsible for total health care spending in 2003.
Concentration of Health Spending in the Total U.S. Population
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Concentration of Health Spending Among Total U.S. Families
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Notes: Health spending is defined as total payments, or the sum of spending by all payer sources. Families are defined as a group of persons, living together, who are related to one another by blood, marriage, adoption, foster care, or self-identified as a single unit.
Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2003 Full Year Population, available at http://www.meps.ahrq.gov/Puf/PufDetail.asp?ID=135.
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Exhibit 1.12: Total Medicaid Spending, FY1992-FY2004
Medicaid spending grew at an average annual rate of 7.8% between FY1992 and FY2004, growing from a total of $119.6 billion in FY1992 to $295.9 billion in FY2004.
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Notes: Includes both federal and state spending. All figures are for federal fiscal years.
Sources: Kaiser Commission on Medicaid and the Uninsured estimates prepared by the Urban Institute using data from the Center for Medicaid and State Operations, Centers for Medicare and Medicaid Services, Financial Management Reports (tabulations from Form HCFA-64/CMS-64), 2006.
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Exhibit 1.13: Sources of Growth in Federal Medicaid Expenditures on Benefits, 2003-2004
Federal Medicaid spending is estimated to grow by $11.3 billion between 2003 and 2004. Higher spending on the disabled is the largest source of estimated growth, accounting for 56% of the 2003 to 2004 increase. The elderly account for 26% of the increase, and adults and children together comprise less than 20% of the estimated spending increase.
Much of the estimated increase of $11.3 billion is related to increased spending on services rather than increased enrollment. Sixty-two percent of the estimated increase is services-related, while 38% is enrollment-related.
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Source: Kaiser Commission on Medicaid and the Uninsured analysis of the Congressional Budget Office Medicaid baseline, March 2004.
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Exhibit 1.14: Medicaid Enrollees and Expenditures on Benefits, by Eligibility Category, 2003
As estimated for 2003, elderly beneficiaries made up 9% of enrollment but accounted for 26% of spending on benefits, and disabled beneficiaries made up 16% of enrollment but accounted for 43% of benefit spending. In contrast, adults and children together were estimated to represent 75% of enrollment but to account for 31% of spending.
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Note: Expenditure distribution based on Congressional Budget Office data that includes only federal spending on services and excludes Disproportionate Share Hospital payments, supplemental provider payments, vaccines for children, administration, and the temporary Federal Medicaid Assistance Percentage increase.
Source: Kaiser Commission on Medicaid and the Uninsured estimates based on Congressional Budget Office and Office of Management and Budget data, 2004.
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Exhibit 1.15: Medicaid Payment per Enrollee by Acute and Long-Term Care, 2003
The Medicaid Program makes available a comprehensive array of acute care and long-term care services to most of its enrollees, but spending patterns vary considerably across the different eligibility groups. Nearly all of the estimated spending per child and adult enrollee in 2003 was for acute care, while a much larger proportion of estimated spending per elderly and disabled enrollee was for long-term care. Forty percent of estimated spending per disabled enrollee was for long-term care, and almost three-quarters more than half of estimated spending per elderly enrollee was for long-term care.
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Note: Long-term care represents 1.0% of spending per adult enrollee.
Source: Kaiser Commission on Medicaid and the Uninsured estimates based on Congressional Budget Office and Urban Institute data, 2004.
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Exhibit 1.16: National Prescription Drug Expenditures, Percent by Type of Payer, 1994-2004
In 1994, the largest share of national prescription drug expenditures was paid out-of-pocket by consumers (43.1%), followed by private insurance (35.5%), and government programs (21.5%). Since 1995, however, private insurance has paid the largest proportion, which rose until 2001 (50.0%) and then declined to 47.6% in 2004. The proportion paid out-of-pocket by consumers declined over the decade from 43.1% in 1994 to 24.9% in 2004. The share paid by government programs (mostly Medicaid) has risen from 21.5% in 1994 to 27.5% in 2004.
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Notes: Percentages may not total 100% due to rounding. With the 2004 estimates, the Centers for Medicare and Medicaid Services (CMS) incorporated new concepts, methods, and data sources in the National Health Expenditure Accounts and revised the entire time series back to 1960. According to CMS, the most important revisions were the introduction of estimates of investment in medical equipment and software, expanded estimates of investment in medical-sector structures, and the use of updated data from the U.S. Census Bureau’s 2002 Economic Census and other sources. Overall, these changes raised the estimates of health spending 3-4% for nearly all years prior to 2004.
Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2004; file nhe2004.zip).
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Exhibit 1.17: Relative Contributions of Utilization, Types of Prescription Drugs Used, and Price to Rising Prescription Drug Expenditures, 1993-1997 vs. 1997-2002
Increased utilization, changes in the mix of drugs used (from older, less expensive drugs to newer, higher cost drugs), and manufacturer price inflation for existing drugs are the factors driving the dramatic increases in drug spending. Nearly half (42%) of the increase experienced from 1997 to 2002 was due to increases in the use of drugs (the change in the number of prescriptions dispensed), while changes in the mix of drugs used (34%) and price inflation of existing drugs (25%) contributed in lesser proportions. Comparing the 1997-2002 period to the previous five-year period, price inflation played a relatively larger role in cost growth, while drug use played a relatively smaller role.
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Source: Kaiser Family Foundation and Sonderegger Research Center analysis using National Health Expenditures data for prescription drugs from the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.gov/statistics/nhe/historical/, Table 2; price data from IMS Health, Pharmaceutical Pricing UPDATE, various years; and utilization data from IMS Health, National Prescription Audit Plus, various years, updated with data from the IMS Health web site at http://www.imshealth.com.
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Exhibit 1.18: Manufacturer Price Increases for Existing Drugs vs. Retail Price Increases Reflecting the Use of Newer Drugs, 1992-2002
Annual increases in manufacturer prices (a measure of price inflation for existing drugs) have been significantly lower in recent years than increases in average retail prescription prices (which include both inflation and the higher prices for newly launched drugs). This difference demonstrates the growing contribution of a more expensive drug mix to overall price increases.
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Source: The Kaiser Family Foundation and the Sonderegger Research Center, Prescription Drug Trends, A Chartbook Update, November 2001, Exhibit 23, at http://www.kff.org/insurance/3161-index.cfm, updated by the Kaiser Family Foundation with retail prescription price data from the National Association of Chain Drug Stores website (www.nacds.org) and manufacturer price data from personal communication, IMS Health.
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Exhibit 1.19: Retail Prescriptions Filled at Pharmacies by State: Prescriptions Per Capita and Retail Prescription Sales, 2004
The number of prescriptions (both new and refills) per capita dispensed in retail pharmacies varied by state, from 6.5 prescriptions in Alaska to 15.5 prescriptions in Tennessee, with a U.S. average of 10.6 in 2004. U.S. retail prescription sales totaled $168.0 billion in 2004, with California's total sales the highest at $14.1 billion, and Wyoming's the lowest at $0.3 billion.
State
Prescriptions Per Capita
Retail Prescription Sales (in thousands)
United States
10.6
$168,040,605,058
Alabama
13.6
$3,089,947,095
Alaska
6.5
$298,230,229
Arizona
8.8
$2,420,393,186
Arkansas
14.2
$1,857,154,911
California
7.3
$14,087,494,841
Colorado
8.0
$1,989,562,412
Connecticut
11.4
$2,310,772,560
Delaware
11.6
$562,453,914
District of Columbia
9.4
$383,748,007
Florida
12.0
$10,633,770,622
Georgia
11.0
$4,927,535,131
Hawaii
6.9
$511,508,171
Idaho
8.6
$682,136,675
Illinois
11.5
$7,140,947,721
Indiana
12.1
$3,814,180,545
Iowa
13.0
$1,955,852,687
Kansas
11.9
$1,692,714,334
Kentucky
15.4
$3,104,436,045
Louisiana
13.5
$3,026,741,189
Maine
11.0
$824,544,621
Maryland
10.0
$3,703,467,797
Massachusetts
12.3
$4,309,323,838
Michigan
9.8
$5,719,120,787
Minnesota
10.0
$2,841,125,150
Mississippi
13.6
$2,032,533,755
Missouri
12.5
$3,636,930,760
Montana
9.0
$433,877,348
Nebraska
10.8
$992,775,757
Nevada
8.1
$989,713,910
New Hampshire
10.1
$709,938,758
New Jersey
10.0
$5,801,286,590
New Mexico
9.3
$811,627,244
New York
10.3
$13,131,242,860
North Carolina
13.3
$6,247,096,567
North Dakota
9.4
$333,131,363
Ohio
10.9
$6,468,918,575
Oklahoma
10.9
$2,023,036,488
Oregon
8.8
$1,539,618,122
Pennsylvania
11.0
$7,486,368,998
Rhode Island
10.7
$634,936,670
South Carolina
13.6
$2,820,590,642
South Dakota
10.6
$415,272,003
Tennesse
15.5
$4,506,282,766
Texas
9.8
$11,710,419,016
Utah
8.9
$1,119,281,855
Vermont
10.7
$389,295,827
Virginia
9.8
$4,059,155,173
Washington
8.4
$2,882,205,824
West Virginia
15.0
$1,461,892,338
Wisconsin
11.4
$3,225,792,856
Wyoming
10.1
$283,642,219
Notes: These data are based on Vector One™: National by Verispan, L.L.C., which collects data from a panel of retail pharmacies, third party payers, and data providers. Retail pharmacies include independent pharmacies, chain pharmacies, food stores, and mass merchandisers found in 814 defined regional zones. These data describe the number of prescriptions filled by retail pharmacies only and exclude those filled by mail order. The total sales reflect the amount the pharmacies are paid for all prescriptions filled. Although not included in the Retail Prescription Sales amounts, mail order sales totaled $41.3 billion or 19% of total sales in 2004 according to industry statistics report by the National Association of Chain Drug Stores (http://www.nacds.org/wmspage.cfm?parm1=507).
Definitions: Retail Prescriptions: Products filled by retail pharmacies, including new prescriptions and refills of both brand name and generic drugs. These products exclude drugs purchased without a prescription (i.e., over-the-counter items).
Sources: Calculations based on Vector One™: National from Verispan, L.L.C.: Special Data Request, 2005; U.S. Census Bureau, Annual Population Estimate, http://www.census.gov/popest/datasets.html.
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 04/27/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.20: Trends in Promotional Spending for Prescription Drugs, 1996-2004
Promotional spending by pharmaceutical companies involves a variety of activities whose relative contributions to total promotional costs have shifted somewhat over time. Consumers are most aware of direct-to-consumer (DTC) advertising (advertising directly to consumers through television, radio, and popular periodicals and newspapers). Most promotional spending (86%) in 2004, however, was devoted to promoting drugs directly to physicians through sampling (57%), detailing (26%), and professional journals (2%), with the remaining 14% directed at consumers. DTC advertising experienced the highest average annual increase (22%) from 1996 to 2004, compared to 15% for the retail value of sampling, 12% for detailing, and 1% in professional journal advertising.
Promotional Spending ($ in billions)
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Notes: Numbers may not total due to rounding. Sampling is the value of samples left at sales visits to office-based physicians. The samples are valued at the prices at which they would be sold in retail pharmacies. Detailing is expenses for the sales activities of pharmaceutical company representatives directed to office-based and hospital-based physicians and hospital directors of pharmacies; approximately 85% of detailing is for office-based sales visits. Direct-to-Consumer Advertising is expenses for advertising to consumers through television, magazines and newspapers, radio, and outdoors. Professional Journal Advertising is expenses for advertising appearing in medical journals.
Source: IMS Health website at http://www.imshealth.com (About Us, Press Room, Top-Line Industry Data, 2004, U.S.).
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
Trends and Indicators in the Changing Health Care Marketplace
Exhibit 1.21: Profitability Among Pharmaceutical Manufacturers Compared to Other Industries, 1995-2004
For every year from 1995 through 2002, the pharmaceutical industry was the most profitable industry in the U.S. Since 2002, however, its profitability has declined, with drug companies ranking as the third most profitable industry in 2004 (15.8%), with mining, crude-oil production the most profitable industry (22.1%). Drug companies were three times more profitable than the median for all Fortune 500 companies in 2004 (15.8% compared to 5.2%).
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Notes: Percent is the median percent net profit after taxes as a percent of firm revenues for all firms in the industry. The second ranked industry for each year shown was commercial banks.
Source: Kaiser Family Foundation and Sonderegger Research Center, Prescription Drug Trends: A Chartbook Update, November 2001, Exhibit 4.11, at http://www.kff.org/insurance/3161-index.cfm, updated with data from Fortune, Fortune 500 Industry Rankings: April 14, 2003, p. F-26 (2002 data), April 5, 2004, Vol. 149, No. 7, p. F-26 (2003 data), and April 18, 2005, Vol. 151, No. 8, p. F-28 (2004 data).
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number:7031 Information Updated: 02/08/06
Trends and Indicators in the Changing Health Care Marketplace Information provided by the Health Care Marketplace Project. Publication Number: 7031
