What factors are driving the reduction in patient out-of-pocket drug costs?

The vast majority of patients in the United States are experiencing low out-of-pocket costs for their drugs — both paying a smaller share of costs as well as seeing a downward trend in their costs on average. The IQVIA Institute for Human Data Science published new research in Medicine Spending and Affordability in the U.S.: Understanding Patients' Costs for Medicines that details factors improving drug affordability for patients.

Lower drug price growth and improvements in affordability to patients is a testament to the positive market dynamics of the American pricing system and the fact that manufacturers, health insurers, and intermediaries, such as wholesalers and benefits managers, have taken actions to reduce the burden of drug costs to patients.

These four market-driven actions have had a direct impact on patient out-of-pocket costs:

Changes in health insurance type and benefit design — The average amount paid out-of-pocket per prescription stayed steady at $10.67 in 2018 and 2019, as high levels of generic drug use and greater use of manufacturer coupons by those enrolled in commercial plans offset changes in insurance design which expose some patients to higher costs.

Higher usage of generics — Losses of Exclusivity (LOE), or patent expiries, resulted in a dramatic shift of volume to generics.

Record low price increases on branded drugs — A rising number of prescriptions are now dispensed with a $0 payment by the patient, and now amount to 44% of all branded prescriptions in 2019, up from 36% in 2015.

Increase in patients reaching “catastrophic” coverage level — The so-called “donut hole” for Medicare patients has been closed, contributing to lower costs per prescription for all patients as costs are now 25% of the full price until the “catastrophic” annual out-of- pocket threshold is reached.

The IQVIA Institute analysis found that over 90% of branded and generic prescriptions have a final out-of-pocket cost below $20, and only 1.1% have a cost above $125.  

The report also highlights important findings in these areas:

• Medicine spending levels and trends
• Total out-of-pocket costs for patients
• Out-of-pocket costs for Medicare patients
• The cost of insulin
• Patient cost sensitivity
• Insurance changes since COVID-19
• Policies impacting medicine pricing

This report by the IQVIA Institute will undoubtedly contribute to more transparency and understanding of the different levels of cost.

My colleague Michael Kleinrock, Research Director at the IQVIA Institute, will be hosting a live webinar on these topics on Tuesday, August 11th at 10:00am ET. Register here to listen and ask questions live.

The full report, including a detailed description of study methodology, is available for download at www.IQVIAInstitute.org.