Featured in the Sunday Globe on November 22, 2020
A lot of attention and a bevy of proposals have focused on the rising cost of drugs, among all Americans, including older adults covered by Medicare.
But are these costs really rising as fast as people think? Or is the concern over drug spending due to something I call the prescription escalator?
The U.S. Bureau of Labor Statistics reported in September that the average spending by senior households for prescription and nonprescription drugs dropped in 2019 for the second straight year. In fact, households headed by Americans age 65 and older devoted only 1.5% of their total household outlays to out-of-pocket spending on drugs in 2019, the lowest level in at least 20 years.
Taking a broader look at Americans of all ages, average out-of-pocket drug spending in 2019 came to $486 per household, close to the amount spent in 2014. The long-term trend is that out-of-pocket drug spending is a falling share of household budgets.
If it’s not out-of-pocket spending, perhaps the cost of paying for essential medicines is putting an increasing burden on the economy. List prices are certainly rising. The IQVIA Institute calculates that spending for pharmaceuticals, taking list prices at face value, went up by $194 billion between 2014 and 2019. But after taking rebates and discounts into account, the report showed that net revenues to manufacturers rose by only $56 billion, or 19%, over the same stretch.
Read the rest of the piece here.
[gview file=”https://www.progressivepolicy.org/wp-content/uploads/2020/11/Mandel-Boston-globe.pdf” title=”Michael Mandel – Boston Globe”]
