Prescription drugs have grown to become an essential component of health care.  For millions of Americans, prescription therapies are necessary to their health and ability to function in society.  While prescriptions are a relatively small share of overall health spending (11%), they are a key driver of health spending trends, growing almost twice as fast all other health services in recent years. 

Public attention has focused on prescription drugs and on the pharmaceutical industry because of the very rapid growth of drug costs and because a significant portion of the population lacks insurance to cover the costs of the drugs they need.  Older Americans, who use a disproportionate share of prescription drugs, are less likely to have coverage than younger people because Medicare generally does not cover outpatient pharmaceutical costs.  Higher drug costs are placing a stress in public and private insurance programs, and are an important component of the recent growth in state Medicaid spending.  Methods of controlling prescription costs (such formularies, requiring generic rather than brand name drugs, tiered copayments) are being used, and their impact on costs and consumers studied.  Many of these prescription issues are being examined as policymakers explore options for expanding Medicare’s coverage to include outpatient drugs.

The Foundation’s work on the topic of prescription drugs cuts across private sector, Medicare, and Medicaid program areas.  Basic information about the market for prescription drugs, including data on costs and coverage, is provided in chartbooks and factsheets.  Surveys and reports look at the issues surrounding adding a prescription drug benefit to Medicare; recent legislation on this topic is summarized and explained as well.  Recent state efforts to modify their Medicaid prescription programs and pharmaceutical assistance programs are discussed in several reports and fact sheets.  The issue of drug promotion by drug manufacturers is also analyzed in a series of reports.  The Foundation’s web site for in-depth coverage of health policy news (www.kaisernetwork.org) provides an Issue Spotlight on prescription drugs.  The Foundation’s State Health Facts Online website (www.statehealthfacts.kff.org) provides state data on prescription use, sales, and average prices.