The Reality of Prescription Medicine Costs in Three Charts

The Reality of Prescription Medicine Costs in Three Charts

05.27.14 | By Robert Zirkelbach

Recently, there has been a significant amount of conversation around the cost and value of innovative medicines, especially those intended for patients who suffer from chronic, debilitating diseases such as HIV, Hepatitis C and cancer. Providing benefit not only for patients, but the overall U.S. health care system, it’s important that we keep in mind short- and long-term human, economic and societal implications as we work together to address these costly illnesses head on.

Below are three charts that illustrate the reality of the cost and value of biopharmaceutical innovation for patients in the United States.

Retail Spending on Prescription Medicines Is a Small Share of Total U.S. Health Care Spending

In 2012, prescription medicines accounted for just 9 cents of every dollar spent on health care. For the past five years, prescription spending has grown an average of 3.3 percent annually and IMS Health estimates that it will continue to grow more slowly than overall health care spending.  


Medicines Account for a Small and Declining Share of Health Spending Growth

Between 2008 and 2012, prescription medicines accounted for just five percent of overall health care expenditure growth. IMS Health estimates prescription spending will grow at just one to four percent annually through 2017. 

More Than Four Out of Five U.S. Prescriptions Are Filled with Generics

In 2013, nearly 86 percent of prescriptions filled in the U.S. were for generic medicines. It’s important to remember that you can’t have a generic without an innovative medicine. In order to continue to provide patients with options, it’s critical that we continue to prioritize investment in research and development (R&D) or progress will meet a standstill. 

If a majority of patients are using generics, and prescriptions are not driving up overall health care costs, then why does it feel like prescription medicines cost more?

BONUS CHART: Insurance Covers a Lower Share of Prescription Drug Costs than of Other Medical Services

Patients are now paying, on average, around 20 percent out of pocket for their total prescription spending, but just four and seven percent respectively for inpatient and outpatient hospital care. Unfortunately, this is directly incentivizing the more costly side of care.

Additionally, according to two new studies, Health Insurance Exchange plans under the Affordable Care Act are increasing out of pocket costs for patients and limiting access even more to prescription treatments they need and deserve. 

This is a critically-important conversation and we must all work together to address chronic disease and bring down costs across the board. At the same time, keeping the patient at the center should drive all of our collective efforts now and in the future. The two go hand and hand and access to innovative medicines is a key strategy that everyone in the health care community should actively embrace.

Above all, the patient stands to benefit as a result.



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