Thanks to greater use of generic drugs, the financial burden Americans face with prescription drug use has declined, says a study from the RAND Corporation.

The study found that the percentage of people with high financial burden for prescription drugs—those spending more than 10 percent of income on out-of-pocket expenses for prescription drugs—decreased from 2003 to 2007 and had just a slight increase in 2008. The preceding five-year period, from 1999 to 2003, had seen increases for prescription drug costs year after year.

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Over the last decade, researchers say, changes in health care benefits encouraged consumers to use generics and many high-demand medications became available in generic form. Study findings were published in the February issue of Health Affairs.

But despite the improvement, the study found more than 8 million nonelderly Americans had families with high drug-cost burden in 2008 and one in four devoted more than half of their total out-of-pocket medical spending to prescription drugs.

Genericstatisticschart“Our findings are evidence of the success of strategies already in place to help lower the cost of medications for consumers, even during a period when medication use was increasing,” says Walid Gellad, the study’s lead author and a researcher at RAND, a nonprofit research organization. “But the burden of drug costs remains high for many Americans, which is an important issue for policymakers to consider as health reform extends insurance coverage to more people.”

While prescription drug spending accounts for 10 percent of all health care spending in the United States, out-of-pocket costs for prescription medication make up a much larger percentage of individual health spending, particularly among low-income people with public insurance and those with chronic conditions such as diabetes.

“Because medications are a large part of the household health budget, they are obvious targets for households when they need to decrease their health expenses, which can have adverse consequences down the road,” Gellad says, who also is an assistant professor of medicine and health policy at the University of Pittsburgh, a staff physician at the Pittsburgh VA Medical Center, and a researcher with the VA Center for Health Equity Research and Promotion.

Researchers examined data about individual drug spending from 1999 to 2008 among people tracked by the federal Medical Expenditure Panel Survey.

The study found that in 1999 about 3 percent of nonelderly Americans (7 million people) lived in families that spent more than 10 percent of their income on prescription drugs and nearly 27 percent of nonelderly Americans (64.5 million) belonged to families where out-of-pocket drug costs accounted for more than half of all out-of-pocket health care costs.

By 2003, out-of-pocket drug costs had climbed higher. More than 4 percent of nonelderly Americans (10.8 million) had high drug-cost burden and about 34 percent (85.2 million) lived in families where drug costs accounted for more than half of all out-of-pocket health care expenses. By 2008, these numbers had decreased to about 3 percent for families with a high drug-cost burden and 25.4 percent for families with drug costs.

The drug cost burden differed substantially based on family income and types of insurance. In 2008, the percentage of people living in families with a high drug cost burden was 7.5 percent among those with public insurance, 4.5 percent among those with privately purchased individual health plans and only 1.2 percent for those with group or employer-related insurance.

People with chronic health conditions were also more likely to face a high financial burden because of drug costs, the study says. In 2008, more than one in eight people with diabetes faced a high financial burden because of drug costs and a majority of people with the illness lived in families where drug costs accounted for more than half of all out-of-pocket health care spending. Similar trends were seen for patients with high blood pressure and mental disorders.

Researchers also pointed out the uncertainty PPACA provisions—especially with the state-regulated insurance exchanges—will have on drug coverage.

“There is the expectation that future non-group policies will provide better, more-generous drug coverage than existing policies, but the level of generosity remains to be seen,” Gellad says.