The Proportion of Americans Buying Brand-Name Drugs Fuels Boom in Overall Drug Spending

AHRQ News and Numbers

Release date: October 31, 2006

A new report by the Department of Health and Human Services' Agency for Healthcare Research and Quality (AHRQ) shows that consumer spending on outpatient prescription drugs nearly doubled between 1999 and 2003—rising from $94 billion to $178 billion a year. The Federal report also shows that the overall $178 billion spent in 2003 was boosted in part by the increasing number of Americans purchasing brand-name drugs.

This proportion increased from 47.5 percent in 1999 to slightly more than 53 percent in 2003. Meanwhile, the proportion of Americans purchasing generic prescription medicines remained flat, with no significant change.

The new Federal analysis of drugs, which does not include over-the-counter medicines, found:

• Between 1999 and 2003, purchases of brand-name drugs increased from $75.5 billion to $141 billion. Spending on generics rose from about $19 billion to approximately $37 billion during the same time period.
• The average amount per purchase that Americans spent each time they purchased a brand-name or generic prescription medicine also increased. The average price paid for a brand-name drug rose from $59.49 to $82.53 (a 39 percent increase), while for generic medicines the average price increased from $23.48 to $33.53 (a 43 percent rise).

The data in this AHRQ News and Numbers summary are taken from the Medical Expenditure Panel Survey (MEPS), the nation's most complete survey of how Americans use and pay for health care, including their health insurance coverage.

AHRQ, which is part of the U.S. Department of Health and Human Services, works to enhance America's health care system by developing and promoting evidence to improve quality, efficiency, effectiveness, and safety. For more information, access MEPS Statistical Brief No. 144: Trends in Brand Name and Generic Prescribed Medicine Utilization and Expenditures, 1999 and 2003.

To speak with an AHRQ data expert, please contact Bob Isquith at Bob.Isquith@ahrq.hhs.gov or call (301) 427-1539.

Current as of October 2006.

Internet Citation:

The Proportion of Americans Buying Brand-Name Drugs Fuels Boom in Overall Drug Spending. AHRQ News and Numbers, October 31, 2006. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/nn/nn103106.htm