The Financial Burden from Prescription Drugs Has Declined Recently for the Nonelderly, Although It Is Still High for Many

Published In: Health Affairs, v. 31, no. 2, Feb. 2012, p. 408-416

Posted on on February 01, 2012

by Walid F. Gellad, Julie M. Donohue, Xinhua Zhao, Yuting Zhang, Jessica S. Banthin

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Research Question

  1. How have changes in prescription drug coverage affected consumers' direct out-of-pocket expenses?

Prescription drug spending and pharmacy benefit design have changed greatly over the past decade. However, little is known about the financial impact these changes have had on consumers. We examined ten years of nationally representative data from the Medical Expenditure Panel Survey and describe trends in two measures of financial burden for prescription drugs: out-of-pocket drug costs as a function of family income and the proportion of all out-of-pocket health care expenses accounted for by drugs. We found that although the percentage of people with high financial burden for prescription drugs increased from 1999 to 2003, it decreased from 2003 to 2007, with a slight increase in 2008. The decline is evidence of the success of strategies to lower drug costs for consumers, including the increased use of generic drugs. However, the financial burden is still high among some groups, notably those with public insurance and those with low incomes. For example, one in four nonelderly people devote more than half of their total out-of-pocket health care spending to prescription drugs. These trends suggest that the affordability of prescription drugs under the future insurance exchanges will need to be monitored, as will efforts by states to increase prescription drug copayments under Medicaid or otherwise restrict drug use to reduce public spending.

Key Findings

  • The financial burden of prescription drugs has declined recently for the nonelderly.
  • The decrease is probably due to increased use of generic drugs.
  • The financial burden remains high among those with public insurance and those with low incomes.


  • The affordability of prescription drugs under the new insurance exchanges mandated by the Affordable Care Act should be monitored, as should state efforts to increase prescription drug copayments under Medicaid.

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