What Do You Know About Prescription Drug Costs?

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Thank you for taking the quiz, and testing your knowledge on drug prices. For more information on Pew’s drug spending research and to learn more about drug spending and policy solutions, visit the Drug Spending Research Initiative page. # social text : I scored {score} out of {total_questions}! What Do You Know About Prescription Drug Costs? # social url : http://pew.org/2ESFUR1 ?1 In 2016, Americans spent $3 trillion on personal health care, including hospital care, physician services, and medical products. How much of this went toward prescription drugs? - $477 million. - $4.7 billion. - $47 billion. + $477 billion. ! Americans are estimated to have spent $477 billion on retail prescription drugs in 2016, accounting for 17 percent of total personal health expenditures (spending on an individual patient’s health care, including hospital care, physician services, prescriptions, and more). ?2 How much can a drug manufacturer raise the price of a drug each year? - 10 percent. - 100 percent. - 1,000 percent. + As much as it chooses. ! Drug companies are free to increase the price of a drug each year and face no federal restrictions in setting a new list price. ?3 Since 2012, U.S. spending on prescription drugs has risen 30 percent. What’s driving these cost increases? - New drugs designed to treat complex conditions are expensive. - Prices of existing prescription drugs are rising. - Americans are using more prescription drugs. + All of the above. ! New name-brand drugs (on the market for less than two years) are the largest contributors to spending growth. These are often specialty products (including biologics, derived from living cells), which account for 33 percent of drug costs but less than 2 percent of prescriptions. Many of these are used for conditions such as cancer and autoimmune diseases. Yearly increases in the prices of brand drugs with no generic competitors also contribute to the rise in spending. Finally, Americans are using more prescription drugs. In 2016, 4.5 million prescriptions were dispensed in the U.S., a 7 percent increase since 2011, with about half of people taking at least one prescription drug. In addition, Americans over age 50 use more prescription drugs; this demographic, which is growing, accounts for 35 percent of the population but 70 percent of all dispensed prescriptions. ?4 Do public or private health insurance programs spend more on retail prescription drugs? - Private health insurance programs. + Public health insurance programs. ! In 2017, public health insurance programs spent slightly more than private ones on prescription drugs. The public programs accounted for nearly 44 percent ($147 billion), the largest share of which was Medicare (30 percent), followed by Medicaid (10 percent) and other public programs (3 percent). Private health insurance programs, including both employer-based and individual coverage, spent about $144 billion on retail prescription drug costs, accounting for just under 43 percent of retail prescription drug spending. - They spend about the same amount. ?5 How much does the average American spend out of pocket on retail prescription drugs each year? - $3. - $37. + $137. ! In 2017, average out-of-pocket spending on prescription drugs was $137 across all ages and insurance types. This is expected to rise to $190 by 2026. It’s important to note that this is an average, and what patients pay varies by health plan. Nearly half of commercial plans now include a deductible for prescription drugs, requiring patients to pay the list price for a medication until they reach an out-of-pocket maximum. For patients taking high-cost specialty drugs, this can mean paying thousands of dollars per month. Surveys show that prescription drugs are becoming unaffordable for many people. A 2016 Kaiser Family Foundation poll found that 44 percent of respondents worried about affording the cost of their prescriptions, 21 percent did not fill a prescription due to cost, and 16 percent had cut pills or skipped doses of a prescription. Out-of-pocket costs are also a challenge for Medicare beneficiaries. In 2015, patients reaching the catastrophic coverage phase of Medicare’s prescription drug benefit paid an average of $257 per month for each high-cost prescription drug, defined as medications with an average price of more than $1,000 per month. - $1,370. ?6 The U.S. government spent an average of $1,011 per capita on prescription drugs in 2015. How much did it spend compared with other industrialized countries? - The U.S. spent half as much as other industrialized countries. - The U.S. spent the same as other industrialized countries. + The U.S. spent about twice as much as other industrialized countries. ! Of these countries, the U.S. has the highest per capita spending on pharmaceuticals. In 2015, 19 industrialized countries spent an average of $452 per person; at $1,011 per capita, the United States spent more than double that amount. - The U.S. spent about four times as much as other industrialized countries ?7 Brand pharmaceuticals are generally more expensive in the U.S. than in other high-income countries. Can the U.S. purchase and import drugs from other countries? - Yes. + Sometimes, but only from certain countries and under certain circumstances. ! In some instances, the Food and Drug Administration allows foreign drugs to be marketed in the United States. For example, during a drug shortage, FDA has allowed temporary importation of certain drugs after evaluating their quality and safety. The Department of Health and Human Services has the authority to permit the importation of prescription drugs from Canada if they are safe and cost-effective enough; however, this has never been done. - No. ?8 What is the Medicare Part D “doughnut hole”? - The Medicare Part D deductible. + A coverage gap in the program in which patients pay a larger share of the cost of drugs. ! The Medicare Part D doughnut hole refers to a period when Medicare Part D enrollees pay a larger share of drug costs for prescription drugs. The doughnut hole begins when an enrollee’s annual drug costs reach $3,700 and ends when catastrophic coverage begins, at about $8,000 of total drug spending. The Affordable Care Act phases out the doughnut hole by 2020, reducing patients’ out-of-pocket drug costs in the coverage gap. - A benefit period for patients who have reached an out-of-pocket threshold and are responsible for 5 percent of the cost of drugs. - A tasty reward for signing up for Medicare Part D. ?9 Which are more effective—brand or generic prescription drugs? - Brand drugs. - Generic drugs. + They are equally effective. ! In order for FDA to approve a generic drug, the manufacturer must prove the generic drug is “bioequivalent” to, or effectively the same as, the brand drug. Generics must have the same active ingredient and be identical in terms of dosage, safety, strength, and manner in which they are taken. - The more expensive option. ?10 What is a “pharmacy benefit manager” (PBM)? - A contractor that manages a drug benefit for a health plan. - A third party that develops the list of drugs covered by a health plan. - An organization that negotiates prices with drug manufacturers. + All of the above. ! PBMs are hired as third-party administrators to handle prescription drug programs for insurers. PBMs contract with pharmacies, process pharmacy benefit claims, develop lists of covered drugs (formularies), and negotiate prices with drug manufacturers. PBMs do the nuts-and-bolts work of making sure that people with health insurance receive their prescription drug benefits. According to the PBM trade association, PBMs manage benefits for 266 million Americans.