Rising Drug Costs Burgen West Virginie

RISING DRUG COSTS BURDEN WEST VIRGINIA—A FACT SHEET The burden of prescription drug costs is rising rapidly. It varies widely among states. • Drug cost burden is the average share of income used for prescription drugs— retail drug spending (by patients and private or public insurance) divided by income. Spending reflects number of prescriptions filled and their average price. • The 2002 US drug cost burden was 1.8% of personal income, up from 1.2% in 1998. • The burden is highest in states with more poor, sick, old, and uninsured people. West Virginia • In West Virginia, the prescription drug cost burden in 2002 was 3.0%, 2nd highest among the states, and 59% above the US average. • The West Virginia burden rose from 2.1% in 1998. So in just the 4 years from 1998 to 2002, prescription drugs consumed nearly 1% more of West Virginians’ incomes. Drug cost burdens rose faster by that measure in only five states. What Underlies High Drug Cost Burdens? The study found that differences in states’ burdens are driven by three factors. The strongest influence is the average number of prescriptions used per person (use rate), and then average personal income. Prescription prices have less effect on differences in burden. That is partly because average prices vary least among the states. Looking at the components of drug cost burden in 2002, West Virginia was • • • • 23% above average on drug spending, 3rd-highest of the states 23% below the US average on income, 3rd from the lowest 42% above the US average on use rate, 2nd-highest of the states 13% below the US on the average price of prescriptions filled. Many states with heavy drug cost burdens suffer high rates of illness and also have an older population—so their people tend to need more medications than the US average. Looking at a few indicators of need for prescription drugs, West Virginia was • • • 30% above the US on share of adults with diabetes, 3rd-highest among the states 14% above the average in 2000 on heart disease deaths, 5th-highest 42% above the average—leading the nation—on share of residents over age 65. Especially in states with serious health problems or more older people, slashing use isn’t the way to lower burden. Further, even where use rates are high, many people don’t get the drugs they need—especially in lower-income states. An estimated 70 million Americans have no drug benefits. Many others with limited benefits or high copays also cannot afford needed prescriptions. This is another reason why it is hard to cut use without hurting people. Cutting Drug Prices: The Only Practical Way to Reduce the Burden WHAT – PRICE CUTS • Many patients and taxpayers cannot afford to spend more for medications. • Lowering drug cost burdens requires cutting use or prices. • Trying to reduce this burden by slashing use is likely to harm vulnerable people. • So efforts to cut drug prices seem vital—and increasingly likely. WHERE – HIGH BURDEN STATES FIRST • States with especially heavy drug cost burdens or where the burden is rising fastest will feel the most pressure to act politically to lower drug prices (if all else is equal). nd • West Virginia, with its 2 -ranked burden, passed a ground-breaking law to cut drug prices last spring. Maine did so in 2000—when it had the highest burden of any state on the Canadian border, where awareness of lower foreign prices first grew. • But even where burdens are lower, drug costs and the urgency of reform are growing. HOW – MAKE A PACKAGE DEAL • Sharp price cuts would permit filling many prescriptions now unfilled. The industry would make up on volume much of the revenue lost to lower prices. Public programs could guarantee to preserve industry revenue, profit, and ability to fund research at current levels—and cover the very low cost of making more pills. Reforms to finance all needed drugs for all residents of a state or the US are surprisingly affordable. How does this state compare? Prescription drug cost burden and problems that contribute to it (figures are for 2002 unless noted) Burden, 2002: Rx spending as % of personal income Burden in 1998 WEST VIRGINIA Rank among states % above (or below) US avg US average 3.0% 2.1% 2 1 59% 75% 1.87% 1.2% Rx spending/ person Average Rx price Avg. number of Rx /person Personal income $710 $47.31 15.0 $24,794 3 48 2 3 (1=low) 23% (13% below) 42% (23% below) $579 $54.58 10.6 $30,906 % over age 65, 2001-2002 Diabetic % of adults Heart disease deaths per 100,000 residents, 2000 % uninsured, 2001-2002 17% 8.7% 1 3 42% above 30% 12% 6.7% 224 13.9% 5 21 14% (7% below) 196 15%