Health Reform WK-EDGE Average drug spending dropped for consumers with employer-sponsored coverage
Wednesday, November 9, 2016

Average drug spending dropped for consumers with employer-sponsored coverage

By Kayla R. Bryant, J.D.

Although average annual drug spending for those with employer-provided health coverage dropped $23 between 2009 and 2014, more people are spending over $1,000 a year on prescription drugs. The Kaiser Family Foundation (KFF) believes that the drop in spending first occurred to due generic substitution and then from the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) contraceptive mandate (section 2713).

Employer-based plans. Recent surveys have shown that a growing amount of those taking prescription drugs find it difficult to afford their medication. The KFF also noted that government and insurer studies blame specialty drugs and price increases for name brand drugs as the reason for the more rapid drug spending growth in recent years. A comparison revealed that drug spending trends in employer coverage generally match national patterns, such as a large spending spike in 2014.

Trends. Average drug spending in employer plans stayed within a small range when adjusted for inflation for almost a decade, at $909 in 2004 to $947 in 2013. In 2014, it grew by 13 percent to $1,053. At the same time, the share of people with drug spending exceeding $5,000 (both out of pocket and paid by insurance) grew from 1.6 percent in 2004 to 3.9 percent in 2014. Those with diagnosed endocrine disorders, circulatory diseases, cancers, and blood diseases are more likely to have high drug spending. The share of those with employer coverage that spent over $1,000 per year on retail prescription drugs nearly tripled. Although this group represents only 3 percent of all people with large employer coverage, their spending accounts for one-third of aggregate out of pocket spending.

Despite this growth, those with large employer coverage spent less on average in 2014 ($144) than they did in 2009 ($167, or $185 in 2014 dollars). During this time, some popular drugs lost patent protection and patients began taking the generic option. In addition, the contraception mandate may have been responsible for causing women to see the sharpest drop in out-of-pocket spending. Oral contraceptives make up 63 percent of drop in average out-of-pocket spending on retail drugs after 2012.

Companies: Kaiser Family Foundation

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