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Analysis

Private Insurance Accounted for Nearly Half of Prescription Drug Spending in 2017

By Jack O'Brien  
   May 21, 2019

A Kaiser Family Foundation report found that 82% of total retail prescription drug spending in 2017 came from private insurers, Medicare, or Medicaid.

Private health insurance constituted 42% of retail prescription drug spending in 2017, more than Medicare Part D and Medicaid combined, according to a Kaiser Family Foundation (KFF) study released Monday.

Retail prescription drug spending totalled $333 billion in 2017, with private insurers accounting for $140 billion, the report found.

Medicare Part D accounted for $101 billion, out-of-pocket totalled $47 billion, Medicaid accounted for $33 billion, and other payers contributed $13 billion.

The findings show that three major coverage areas continue to account for a significant portion of the growing retail prescription drug spending sphere.

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Additionally, the top five drug products in terms of total spending accounted for at least 10% of overall prescription drug spending by each payer in 2016.

For private insurers, Humira led the way in total spending, accounting for $4.9 billion, followed by Enbrel at $2.4 billion, and Copaxone at $1.2 billion.

Harvoni led for both Medicare Part D and Medicaid at $4.4 billion and $2.2 billion, respectively.

Revlimid finished second for Medicare Part D at $2.6 billion, followed closely by Lantus Solostar at $2.5 billion. Humira was second among Medicaid spending at $1.3 billion, followed by Abilify at $1.1 billion.

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The KFF study also indicated that average annual out-of-pocket prescription drug spending leveled out for both private health plans and Medicare Part D between 2007 and 2016.

Patients with private insurance spent an average of $365 out-of-pocket on prescription drugs in 2016, down from a peak of $427 in 2009, while Medicare Part D beneficiaries spent $132 in 2016, down from a peak of $164 in 2008. 

Looking at total personal healthcare spending by consumers, retail prescription drug spending accounted for 13% by consumers under private health plans, as well as 15% for Medicare beneficiaries. 

The KFF study explained that the rate of drug spending as a portion of personal healthcare spending for Medicaid beneficiaries was lower, 6%, due to Medicaid paying for "more expensive services" not covered by private insurers or Medicare.

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Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Retail prescription drug spending totalled $333 billion in 2017, with private insurers accounting for $140 billion.

Meanwhile, Medicare Part D and Medicaid spending combined to total $134 billion.

Average annual out-of-pocket prescription drug spending leveled out for both private insurers and Medicare Part D between 2007 and 2016.


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