June 29, 2018

How Much Does the U.S. Spend on Prescription Drugs?

This question is examined in detail in Projections of the Prescription Drug Share of National Health Expenditures Including Non-Retail, a study authored by Dr. Charles Roehrig, fellow in the Altarum Center for Value in Health Care.

Each year, the Centers for Medicare & Medicaid Services (CMS) releases a ten year projection of national health expenditures (NHE) that includes data for prescription drug spending, as well as "non-retail" prescription drug spending. While this "non-retail" spending on prescription drugs are included in the CMS data, it's not separately identifiable because this consists of prescription drugs that are administered as part of a physician visit, or during a hospital or nursing home stay. Therefore, the cost of these drugs is built into the charge for the visit or stay, and shows up in the CMS data as spending on physician, hospital, and nursing home services. The purpose of this report is to build a better understanding of how "non-retail" spending is allocated across national health account services categories.

Key findings include:

  • Retail and non-retail drug spending in the U.S. accounted for 14.1% of total health care spending in 2016.
  • Between 2017 and 2026, total drug spending is projected to range from 14.0% to 15.4% of total health spending.
  • Between 2017 and 2026, retail drug spending grows from $329 billion to $605 billion while non-retail drug spending grows from $143 billion to $270 billion.

Read the full report.

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