Report to the President
Prescription Drug Coverage,
Spending, Utilization, and Prices
From the Department of Health &
Human Services
April 2000
TABLE OF CONTENTS
Executive Summary
Introduction (pdf version)
Chapter 1: Prescription Drug
Coverage (pdf version )
Chapter 2: Effects of Prescription
Drug Coverage on Spending and Utilization (
pdf version)
Chapter 3: Prescription Drug
Prices (pdf version)
Future Research (pdf version)
Appendix A: Issues in
Prescription Drug Coverage, Pricing, Utilization, and
Spending: What We Know and Need to Know (Literature Review)
(pdf version)
Appendix B: Development of MCBS and MEPS
Estimates for This Report (pdf version)
Appendix C: State and Regional Variations
(pdf version)
LIST OF TABLES
Table 1- 1. Medicare
Beneficiaries with Prescription Drug Coverage for at Least
One Month, by Primary Source of Medicare Supplemental
Coverage, 1996
Table 1- 2. Duration of
Prescription Drug Coverage for Medicare Beneficiaries Who
Had Coverage in 1996
Table 1- 3. Medicare
Beneficiaries with and without Prescription Drug Coverage,
For at Least One Month, by Income, 1996
Table 1- 4. Medicare
Beneficiaries Who Never Had Drug Coverage During the Year,
by Income, as Percent of All Beneficiaries without
Coverage, 1996
Table 1- 5. Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Age, 1996
Table 1- 6. Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Sex, 1996
Table 1- 7. Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Race, 1996
Table 1- 8. Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Metropolitan Residence,
1996
Table 1- 9. Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Self-Reported Health Status,
1996
Table 1-10.Medicare
Beneficiaries with and without Prescription Drug Coverage
for at Least One Month, by Functional Status, 1996
Table 1-11.Medicare
Beneficiaries with and without Prescription Drug Coverage,
by Number of Chronic Conditions, 1996
Table 1-12.Medicare
Beneficiaries with and without Prescription Drug Coverage,
by Use of Inpatient Hospital Services, 1996
Table 1-13.Percent of
Non-Medicare Population with Drug Coverage at Any Time
During the Year, by Source of Coverage, 1996
Table 1-14.Drug Coverage
of Non-Medicare Population, by Income, 1996
Table 1-15.Percent of
Non-Medicare Population with Drug Coverage, by
Self-Reported Health Status, 1996
Table 1-16.Distribution of
Health Insurance Coverage by Type of Insurance, 1996 and
1998
Table 2- 1. Utilization and
Spending for Prescription Drugs by Medicare Beneficiaries
with and without Drug Coverage, 1996
Table 2- 2. Utilization and
Spending for Prescription Drugs by Non- Medicare
Individuals with and without Drug Coverage, 1996
Table 2- 3. Average
Prescriptions, Total Spending, and Out-of-pocket Spending
for Prescription Drugs by Medicare Beneficiaries, by Months
of Coverage, 1996
Table 2- 4. Average Number
of Prescriptions, Total Spending, and Out- of-pocket
Spending for Prescription Drugs by Medicare Beneficiaries
with and without Drug Coverage, by Primary Source of
Supplemental Coverage, 1996
Table 2- 5. Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries with and without Drug Coverage,
by Family Income as a Percent of Poverty, 1996
Table 2- 6. Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Non-Medicare Individuals with and without Drug Coverage,
by Family Income as a Percent of Poverty, 1996
Table 2- 7. Medicare
Beneficiaries Filling at Least One Prescription and Number
of Prescriptions Filled, by Drug Coverage and Self-
Reported Health Status, 1996
Table 2- 8. Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries with and without Drug Coverage,
by Self-Reported Health Status, 1996
Table 2- 9. Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries by Duration of Drug Coverage and
Self-Reported Health Status, 1996
Table 2-10.Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries with and without Drug Coverage,
by Other Indicators of Health Status, 1996
Table 2-11.Average Number
of Prescriptions and Average Total Spending for
Prescription Drugs by Prescription Drug Users with and
without Drug Coverage, by Self-Reported Health Status,
1996
Table 2-12.Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries with and without Drug Coverage,
by Age, 1996
Table 2-13.Average Total
Spending and Out-of-pocket Spending for Prescription Drugs
by Medicare Beneficiaries with and without Drug Coverage,
by Race/Ethnicity, 1996
Table 2-14.Distribution of
Medicare Beneficiaries with and without Drug Coverage by
Amount of Prescription Drug Spending, 1996
Table 2-15.Medicare
Beneficiaries with and without Drug Coverage, as Share of
Total Population and Share of the Highest Drug Spenders, by
Primary Source of Supplemental Coverage, 1996
Table 2-16.Medicare
Beneficiaries with and without Drug Coverage, as Share of
Total Population and Share of the Highest Drug Spenders, by
Selected Demographic Characteristics, 1996
Table 2-17.Medicare
Beneficiaries Reporting Selected Measures of Health Status,
as Share of Total Population and Share of the Highest Drug
Spenders, by Drug Coverage, 1996
Table 2-18.Distribution of
Non-Medicare Individuals with and without Drug Coverage by
Amount of Prescription Drug Spending, 1996
Table 2-19.Out-of-pocket
Spending for Prescription Drugs as a Percent of Income, for
all Medicare Beneficiaries and for the Highest Drug
Spenders, by Income, 1996
Table 2-20.Out-of-pocket
Spending for Prescription Drugs as a Percent of Income, for
all Medicare Beneficiaries and for the Highest Drug
Spenders, by Source of Supplemental Coverage, 1996
Table 2-21.Out-of-pocket
Spending for Prescription Drugs as a Percent of Income, for
all Medicare Beneficiaries and for the Highest Drug
Spenders, by Selected Demographic Characteristics, 1996
Table 2-22.Out-of-pocket
Spending for Prescription Drugs as a Percent of Income, for
all Medicare Beneficiaries and for the Highest Drug
Spenders, by Selected Indicators of Health Status, 1996
Table 2-23.Illustration of
Out-of-pocket Costs under Different Coverage Sources for a
Beneficiary with Total Spending of $2,000
Table 2-24.Out-of-pocket
Spending as a Percent of Income for Non- Medicare
Individuals with and without Drug Coverage, by Income
Quintile, 1996
Table 2-25.Components of
Average Consumer Unit Spending, by Income and Age of
Reference Person, 1997-1998
Table 2-26.Change in
Components of Average Consumer Unit Spending for Units with
a Reference Person Age 65 or Older, 1992-1993 to
1997-1998
Table 2-27.Percent of
Population Not Receiving Prescription Medicine Because of
Cost, by Insurance Coverage and Selected Characteristics,
1997
Table 2-28.Percent of
Population Not Receiving Prescription Medicine Because of
Cost, by Detailed Insurance Status, 1997
Table 2-29.Growth in
National Health Expenditures and Prescription Drug
Expenditures, 1970-1998 and Projected 1999-2008
Table 2-30.Growth in
Prescription Drug Expenditures by Source of Payment,
1970-1998 and Projected 1999-2008
Table 2-31.Growth in
Utilization and Spending for Prescription Drugs by Medicare
Beneficiaries, 1992-1996
Table 2-32.Percent Change
in Average Expenditures and Out-of-pocket Expenditures for
Prescription Drugs for Medicare Beneficiaries with and
without Drug Coverage, by Primary Medicare Supplement,
1995-1996
Table 2-33.Percentage
Contribution of Changes in Price and Utilization to 1993-98
Increase in Prescription Drug Spending
Table 2-34.Percent Change
in Average Number of Prescriptions and Expenditures per
Prescription for Medicare Beneficiaries with and without
Drug Coverage, by Primary Medicare Supplement,
1995-1996
Table 3- 1. Illustrative
Example of Pricing for Brand Name Prescription
Drugs
Table 3- 2. Average Invoice
Price Paid for 100 Top-Selling Brand Name Drugs,
1994
Table 3- 3. Average Retail
Unit Price Per Prescription by Type of Drug, Drug Coverage
Status, and Source of Insurance, 1996
Table 3- 4. Illustrative
Example of Different Mix of Prescription Drugs Received by
Two Beneficiaries with Identical Medical Conditions
Table 3- 5. Average and
Median Retail Percent Over Benchmark Price for All Drugs by
Drug Coverage Status and Source of Insurance, 1996
Table 3- 6. Median Retail
Percent Over Benchmark Price for Brand Name and Generic
Drugs by Drug Coverage Status and Source of Insurance,
1996
Table 3- 7. Median Percent
Over Benchmark Price for All Drugs by Length of Coverage
During the Year
Table B-1.Comparison of
Sources of Coverage Estimates for MEPS and MCBS
Table C-1.Percent of Total
Population with Drug Coverage, by Region, 1996
Table C-2.Prescription Drug
Utilization and Spending, Total Population, by Region,
1996
Table C-3.State and Regional
Price Differences
LIST OF FIGURES
Figure 1- 1.Duration of
Prescription Drug Coverage for Medicare Beneficiaries in
1996
Figure 1- 2.Duration of
Coverage for Beneficiaries who Had Coverage in 1996, by
Source of Coverage
Figure 1- 3.Medicare
Beneficiaries Who Never Had Drug Coverage During the Year,
by Income, 1996
Figure 1- 4.Beneficiaries
Who Never Had Drug Coverage During the Year, by
Metropolitan Residence, 1996
Figure 1- 5.Beneficiaries
Who Never Had Drug Coverage During the Year, by Health
Status, 1996
Figure 1- 6.Sources of Drug
Coverage for Non-Medicare Population, 1996
Figure 2- 1.Out-of-pocket
and Insurer Spending on Prescription Drugs by Medicare
Beneficiaries with and without Drug Coverage, 1996
Figure 2- 2.Medicare
Beneficiaries Who Filled A Prescription and Number of
Prescriptions Filled, by Coverage Status, 1996
Figure 2- 3.Out-of-pocket
and Insurer Spending on Prescription Drugs by Non-Medicare
Beneficiaries with and without Drug Coverage, 1996
Figure 2- 4.Out-of-pocket
and Insurer Spending on Prescription Drugs by Medicare
Beneficiaries, by Duration of Drug Coverage, 1996
Figure 2- 5.Out-of-pocket
and Insurer Spending on Prescription Drugs by Medicare
Beneficiaries, by Type of Drug Coverage, 1996
Figure 2- 6.Out-of-pocket
and Insurer Spending on Prescription Drugs by Medicare
Beneficiaries with and without Drug Coverage, by Income,
1996
Figure 2- 7.Percentage of
Medicare Beneficiaries with and without Drug Coverage
Filling at Least One Prescription, by Health Status,
1996
Figure 2- 8.Out-of-pocket
and Insurer Spending for Medicare Beneficiaries with and
without Drug Coverage, by Health Status, 1996
Figure 2- 9.Out-of-pocket
and Insurer Spending for Medicare Beneficiaries with and
without Drug Coverage, by Age, 1996
Figure 2-10.Distribution
of Medicare Beneficiaries and Prescription Drug
Expenditures by Amount of Spending, 1996 62
Figure 2-11.Out-of-pocket
Spending on Prescription Drugs as a Proportion of Income
for Medicare Beneficiaries with and without Drug Coverage,
by Income Level, 1996
Figure 2-12.Out-of-pocket
Prescription Drug Spending as a Proportion of Health
Spending, by Age and Income, 1997-1998
Figure 2-13.Medicare
Beneficiaries Who Did Not Get a Needed Drug Because They
Could Not Afford It, by Source of Insurance and Income,
1997
Figure 2-14.Real Spending
for Prescription Drugs for the Total Population, 1965-1998
and Projected 1999-2008, in 1998 Dollars
Figure 2-15.Prescription
Drug Expenditures as a Percent of National Health
Expenditures, 1965-1997
Figure 2-16.Spending for
Prescription Drugs by Payment Source, Total Population,
1965-1998, in 1998 Dollars
Figure 2-17.Growth in Drug
Spending and Number of Prescriptions per Medicare
Beneficiary, 1993-1996 89
Figure 3- 1.Payment Sources
for Prescription Drug Purchases, 1990-1998
Figure 3- 2.Percent of
Prescriptions Filled with Generic Drugs by Coverage Status
and Source of Insurance, 1996
Figure 3- 3.Percent
Difference Between Average Price for Cash Purchasers and
Average Price for Third Parties (Without Rebates) in 1996
and 1999, for the Most Commonly Prescribed Drugs
Figure 3- 4.Percent
Difference between Average Price for Cash Purchasers and
Average Price for Third Parties (Without Rebates), 1999,
for Drugs Most Frequently Used by Medicare Beneficiaries in
1996
Figure 3- 5.Percent
Difference between Median Price for Cash Purchasers and
Median Price for Third Parties (Without Rebates), 1999, for
the Most Commonly Prescribed Drugs
Figure 3- 6.Percent
Difference Between Average Price for Cash Purchasers and
Average Price for Third Parties (Without Rebates) in 1999,
for the Most Commonly Prescribed Brand Name and Generic
Drugs
Figure A-1.Public Funding as
a Percentage of Total Pharmaceutical Spending
Figure A-2.Health Care
Expenditures as a Share of GDP, 1995
Figure A-3.Pharmaceutical
Expenditures Per Capita in G7 Countries, 1997
Figure C-1.Average Percent
Over Benchmark Price, by Region