More Nonelderly Americans Face Problems Affording Prescription Drugs - HSC Tracking Report No. 22 | HSChange

Drug Affordability Problems Grow

After holding relatively stable during the early years of the decade, the share of Americans under age 65 who reported difficulty affording prescription drugs rose from 10.3 percent in 2003 to 13.9 percent in 2007 -- representing a 35 percent increase, based on data from HSC's 2007 Health Tracking Household Survey (see Data Source and Table 1). Roughly 36.1 million working-age (19-64) adults and children did not obtain prescription drugs because of cost concerns in 2007, an increase of 11.7 million people compared with 2003.

Among working-age adults specifically, unmet prescription drug needs grew from 13.8 percent to 17.8 percent between 2003 and 2007 -- a 29 percent increase. Because children generally enjoy better health and need fewer medications than adults, they tend to experience fewer prescription drug access difficulties. Nonetheless, unmet prescription drug needs between 2003 and 2007 actually grew at an even faster rate among children, climbing from 3.1 percent to 5 percent -- affecting 3.9 million children in 2007.

The growth in affordability challenges likely resulted from higher prescribing rates, drug prices increasing faster than workers' earnings, greater patient cost sharing under private insurance plans, and the arrival of costly new medications on the market.

While growth in drug spending -- reflecting both price and utilization increases -- decelerated in recent years, dropping from nearly 16 percent in 2003 to 5.5 percent in 2007, expensive biologics and other specialty medications are claiming a growing share of total drug expenditures.1 Patients who have prescription drug coverage are also shouldering a larger proportion of drug costs, particularly for brand-name products. The majority of insurers have adopted tiered cost-sharing structures for prescription medications, requiring patients to pay progressively higher amounts for generic, preferred brand-name, nonpreferred brand-name, and in some instances, specialty or biologic drugs -- with these payment differentials widening over time.

Table 1. Percentage of People Under Age 65 with Unmet Prescription Drug Needs, 2001-2007

All people under 65: 2001: 10.5%, 2003: 10.3%, 2007: 13.9%** (change 2003-2007: 3.6 pp**)
Working-age adults (19-64): 2001: 13.6%, 2003: 13.8%, 2007: 17.8%** (change 2003-2007: 4.0 pp**)
Children (0-18): 2001: 3.5%, 2003: 3.1%, 2007: 5.0%** (change 2003-2007: 1.9 pp**)
** Statistically significant change from 2003 at p<0.05.
Source: Center for Studying Health System Change, Community Tracking Study Household Surveys, 2000-01 and 2003; Health Tracking Household Survey, 2007.

Insurance Helps But Less

Insurance coverage continues to be a critical determinant of whether a person can afford prescription drugs (see Figure 1). Working-age adults with employer-sponsored insurance had the best access, with 10.7 percent reporting unmet prescription needs, followed by individuals with nongroup, or individual, insurance.2 Over 95 percent of working-age adults with employer-sponsored coverage had prescription drug benefits. Among insured working-age adults who lacked prescription drug coverage, 18 percent reported going without a needed prescription drug in 2007, compared with 10.5 percent of those who had drug coverage.

Those without any insurance faced the most severe difficulties affording prescription medications, with 34.7 percent indicating they could not afford a prescription drug in 2007. Working-age adults enrolled in public insurance programs fell between these extremes. Nearly one in four working-age adults covered by Medicaid or other state insurance reported challenges affording prescription drugs,3 while close to three in 10 working-age Medicare beneficiaries reported similar difficulties. Despite the launch of the Medicare prescription drug benefit in January 2006, unmet needs among working-age Medicare beneficiaries remained nearly as high as among the uninsured. The majority of working-age adults qualifying for Medicare are disabled and frequently have substantial prescription drug requirements coupled with limited incomes.

Figure 1. Percentage of Working-Age Adults with Unmet Prescription Drug Needs, by Insurance Status, 2007

Employer-sponsored insurance: 10.7%
Nongroup insurance: 14.8%
Medicaid/other state: 24.4%
Medicare: 29.4%
Uninsured: 34.7%
Source: Center for Studying Health System Change, Health Tracking Household Survey, 2007.

Changes Vary by Coverage Type

Shifts in unmet prescription drug needs for working-age Americans between 2003 and 2007 also differed substantially depending on the type of insurance coverage. Access difficulties among working-age adults with employer coverage increased from 8.7 percent to 10.7 percent. Uninsured individuals experienced the steepest deterioration over this period, with the share reporting unmet prescription drug needs surging from 26 percent to 34.7 percent -- accounting for a total of nearly 12.5 million working-age Americans in 2007. There were no statistically significant changes between 2003 and 2007 in unmet prescription drug needs among working-age adults enrolled in Medicaid or Medicare. In earlier years, working-age adults with Medicaid and uninsured working-age adults had comparable rates of unmet needs for prescription drugs, but that gap widened considerably as drug access deteriorated for the uninsured population.

A significant factor behind the overall increase in unmet prescription drug needs is a demographic shift from insurance categories with lower rates of unmet needs to those with higher rates. The proportion of working-age adults with employer coverage declined from 64.5 percent in 2003 to 61.1 percent in 2007, while the proportion who were uninsured or enrolled in Medicaid grew.

Elevated rates of unmet prescription drug needs among privately insured individuals are likely driven by increased patient cost sharing. Between 2003 and 2007, average tiered copayments rose 20 percent or more for people with employer coverage.4 Additionally, prescription drugs are commonly excluded from health plan out-of-pocket spending caps, which exposes patients to substantial costs if they require very expensive medications or need many prescriptions filled.5

While climbing prescription drug prices affect all consumers, uninsured individuals generally must pay full retail price for their medications. Many safety net providers do offer some degree of discounted or free drugs to low-income, uninsured patients, but the availability of such assistance tends to be inconsistent. The introduction of $4 generic drug programs at major retail chains has no doubt benefited the uninsured, though these low prices apply to only a limited selection of medications. And although pharmaceutical manufacturers operate assistance programs for uninsured and low-income individuals, such programs are restricted in scope and enrollment procedures can be cumbersome.6

Income Levels and Chronic Conditions

Two primary factors closely tied to unmet prescription drug needs are the presence of chronic conditions and household income level. Having at least one chronic condition more than doubles the probability of reporting unmet prescription drug needs. Over one in four working-age adults with a chronic condition (26.3%) indicated unmet prescription drug needs in 2007, in contrast with 12.9 percent of those without a chronic condition. Unmet prescription needs were especially elevated for adults living with conditions such as diabetes, chronic obstructive pulmonary disease (COPD), and depression. Moreover, uninsured working-age adults with one or more chronic conditions had the poorest access across all groups, with nearly two-thirds reporting unmet prescription drug needs. People managing chronic conditions are more likely to require multiple medications, making them disproportionately affected by rising drug costs and changes in insurance-based prescription drug coverage.

As expected, low-income individuals -- those in families with income below 200 percent of the federal poverty level, or $41,300 for a family of four in 2007 -- reported significantly greater difficulty affording prescription drugs than their higher-income counterparts. This pattern reflects both their lower rates of insurance coverage and reduced capacity to absorb insurance deductibles and copayments. In 2007, nearly three in 10 low-income working-age adults reported prescription drug access problems (29.8%), compared with 13.5 percent of higher-income working-age adults.

When examining chronic condition status and income in combination, more than four in 10 low-income individuals with chronic conditions reported unmet prescription drug needs in 2007, compared with just 8.9 percent of higher-income individuals without chronic conditions (see Figure 2). There were statistically significant increases between 2003 and 2007 in unmet prescription drug needs among higher-income working-age adults both with and without chronic conditions, but increases among low-income groups were not statistically significant (findings not shown). The larger increases observed among higher-income individuals may point to escalating drug costs and prescribing rates, more substantial cutbacks in private insurance drug benefits relative to Medicaid drug coverage, and fewer avenues for higher-income uninsured people to access assistance from pharmaceutical manufacturers or safety net providers.

Figure 2. Percentage of Working-Age Adults with Unmet Prescription Drug Needs, by Income and Chronic Condition Status, 2007

Low-income, with chronic condition(s): 42.9%
Low-income, without chronic condition: 20.2%
Higher-income, with chronic condition(s): 17.2%
Higher-income, without chronic condition: 8.9%
Source: Center for Studying Health System Change, Health Tracking Household Survey, 2007.

Implications

The growing share of Americans who are unable to afford prescription drugs is especially concerning because medications play an increasingly central role in managing numerous medical conditions, particularly chronic diseases. Furthermore, patients who forgo needed prescription drugs risk worsening health outcomes and costly medical complications. The most vulnerable populations -- those with low incomes, chronic conditions, and the uninsured -- continue to bear the heaviest burden of unmet prescription drug needs. However, between 2003 and 2007, higher-income adults and those without chronic conditions saw percentage point increases in unmet needs that were nearly as large as those experienced by lower-income individuals and people with chronic conditions, respectively. This suggests that prescription drugs are becoming more costly for people across all economic strata and that insurance coverage is providing less financial protection against out-of-pocket drug spending than it did previously.

The forecast for nonelderly Americans' access to prescription drugs is not encouraging. Many individuals' capacity to afford prescribed medications is likely to erode further as the economy continues its downward trajectory. The economic downturn is expected to expand the ranks of the uninsured and impose greater fiscal pressures on state Medicaid budgets, which will likely result in tighter drug benefits and more restrictive eligibility criteria. Moreover, while industry analysts project that spending growth for nonspecialty prescription drugs will stay relatively low over the next several years due to drug patent expirations, they anticipate spending growth for specialty drugs -- which are becoming increasingly important in treatment protocols -- to rise approximately 20 percent per year in the near term.7

Notes

1. Express Scripts, 2007 Drug Trend Report, St. Louis, Mo. (April 2008).

2. Because nongroup insurers routinely use medical underwriting, persons with individual coverage are likely to be healthier than those with other types of coverage. Drug coverage in nongroup policies is less common and likely to be less generous when available. See Merlis, Mark, "Fundamentals of Underwriting in the Nongroup Health Insurance Market: Access to Coverage and Options for Reform," National Health Policy Forum, Washington, D.C. (April 13, 2005).

3. Cunningham, Peter J., "Medicaid Cost Containment and Access to Prescription Drugs," Health Affairs, Vol. 24, No. 3 (May/June 2005). Cunningham, Peter J., Prescription Drug Access: Not Just a Medicare Problem, Issue Brief No. 51, Center for Studying Health System Change, Washington, D.C. (April 2002).

4. The Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits 2007 Annual Survey, Menlo Park, Calif., and Chicago, Ill. (September 2007).

5. Ibid.

6. Felland, Laurie E., Erin Fries Taylor and Anneliese M. Gerland, The Community Safety Net and Prescription Drug Access for Low-Income, Uninsured People, Issue Brief No. 105, Center for Studying Health System Change, Washington, D.C. (April 2006).

7. Express Scripts (2008).

Data Source and Funding Acknowledgements

This Tracking Report draws on findings from the HSC 2007 Health Tracking Household Survey and the Community Tracking Study Household Surveys conducted in 2000-01 and 2003. All three telephone-based surveys employed nationally representative samples of the civilian, noninstitutionalized population. Sample sizes comprised approximately 60,000 people for the 2000-01 survey, roughly 47,000 people for the 2003 survey, and about 18,000 people for the 2007 survey. Estimates are derived from samples of approximately 9,600, 7,300, and 2,600 children in 2000-01, 2003, and 2007, respectively, and about 39,300, 29,900, and 10,400 working-age (19-64) adults, respectively. Response rates for the surveys were 59 percent in 2000-01, 57 percent in 2003, and 43 percent in 2007. Population weights adjust for probability of selection and differences in nonresponse based on age, sex, race or ethnicity, and education. While all three surveys are nationally representative, the samples for the 2000-01 and 2003 surveys were primarily clustered in 60 representative communities, whereas the 2007 survey utilized a stratified random sample of the nation. Standard errors account for the complex sample design of the surveys. Questionnaire design, survey administration, and the question wording of all measures in this study were consistent across the three surveys.

Estimates of unmet need for prescription drugs were based on the following question: "During the past 12 months, was there any time you needed prescription medicines but didn't get them because you couldn't afford it?" Insurance status reflects coverage on the day of the interview and includes coverage obtained through employer-sponsored and individually purchased private insurance, Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), other state programs, TRICARE and other military insurance programs, and the Indian Health Service.

Funding Acknowledgements: This research was funded by the Robert Wood Johnson Foundation. The HSC 2007 Health Tracking Household Survey used for the analysis was sponsored by the Robert Wood Johnson Foundation.

TRACKING REPORTS are published by the Center for Studying Health System Change.
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President: Paul B. Ginsburg

Sources and Further Reading

CMS — Medicare Prescription Drug Coverage (Part D) — This study discusses the Medicare prescription drug benefit launched in January 2006. CMS administers the Part D program that provides drug coverage for Medicare beneficiaries.

KFF — Employer Health Benefits Survey Archives — The Kaiser Family Foundation / Health Research and Educational Trust Employer Health Benefits Survey, cited directly in this report's endnotes, tracks trends in prescription drug copayments and employer-sponsored drug coverage.

Health Affairs — Medicaid Cost Containment and Access to Prescription Drugs — The Cunningham study published in Health Affairs, directly cited in this report, examines how Medicaid cost-containment measures affect prescription drug access for enrollees.

CDC — Therapeutic Drug Use Statistics — The CDC's National Center for Health Statistics provides data on prescription drug utilization trends among Americans, providing context for the rising prescribing rates discussed in this report.

Robert Wood Johnson Foundation — RWJF funded both this research and the HSC Health Tracking Household Survey used in the analysis.