News Release

New Analysis Finds Out-of-Pocket Prescription Drug Spending Decreasing on Average, But More People Spending in Excess of $1,000 a Year

A new Kaiser Family Foundation analysis finds that average annual out-of-pocket prescription drug spending for workers and family members decreased from a recent high of $167 in 2009 to $144 in 2014. Most of the decline in out-of-pocket spending occurred between 2009 and 2012 and is likely due to generic substitution for popular drugs that lost patent protection. The decline in out-of-pocket-spending continued from 2012 to 2014 with nearly two-thirds of the decline during this period attributable to the Affordable Care Act provision requiring most plans to cover contraception without cost sharing.

At the same time, the relatively small share of people spending more than $1,000 a year out-of-pocket on prescription drugs rose in the past decade, from 1 percent in 2004 to 2.8 percent in 2014, and their spending accounted for a third (33%) of all out-of-pocket drug spending by enrollees in large-employer plans in 2014, the study finds.

Focusing on drug spending for people who are insured through a large employer’s health plan, the analysis examined a sample of claims from large employer plans contained in the Truven Health Analytics MarketScan Commercial Claims and Encounters Database.

Other findings include:

  • Mirroring the national trend, average retail drug spending by employer plans spiked in 2014, rising 13 percent after growing relatively slowly for the previous nine years. Health plans absorbed much of the increase over the decade, spending an average $909 a year per person on prescription drugs in 2014, compared to $584 in 2004.
  • After the ACA began requiring plans to make birth control available without cost sharing, the percentage of women of reproductive age with out-of-pocket contraceptive spending fell sharply, from 22 percent in 2012 to 3.7 percent in 2014.
  • In an average month in 2014, about 0.5 percent — or approximately 375,000 people — covered by large-employer plans spent more than $250 on prescription drugs. Democratic presidential candidate Hillary Clinton has proposed a $250 per-month cap on out-of-pocket prescription drug spending.

The analysis, Examining high prescription drug costs for people with employer-sponsored health insurance, and a related 24-chart collection, are available on the Peterson-Kaiser Health System Tracker, which is dedicated to monitoring and assessing the performance of the U.S. health system.

METHODOLOGY

The analysis is based on a sample of claims obtained from the Truven Health Analytics MarketScan Commercial Claims and Encounters Database, which has claims information provided by large employers and health plans, from the years 2004 through 2014. The analysis for each is limited to claims for enrollees with more than six months of enrollment in that year and claims paid on a fee-for-service basis. With these limitations, the number of enrollees in the sample varied from about 785,000 in 2004 to over 15.3 million in 2014.

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