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BY THE NUMBERS

HEALTHCARE REFORM | January 23, 2008

A Consumer Disconnect

Prescription drugs make up just 10 percent of the overall cost of healthcare in the United States, but when asked, most consumers think the figure is between 40 and 79 percent.


The pharmaceutical industry is often criticized by politicians and the public over the high cost of prescription drugs — particularly in discussions around healthcare reform — but public perceptions are skewed. A 2006 report from PricewaterhouseCoopers found that 97 percent of consumers estimated that prescription drugs accounted for 15 percent or more of overall U.S. healthcare costs. Two-thirds of those surveyed put the figure at between 40 and 79 percent. The reality, though, is prescription drugs account for only 10 percent of U.S. national healthcare spending. What adds to the frustration of the industry is that the portion of real prescription products paid for by consumers has fallen dramatically in the past 25 years – to less than 25 percent in 2004 from 70 percent in 1980 . Nevertheless, increases in utilization, the number of conditions covered by treatments and drug prices, along with co-payments and other cost-shifting strategies, has created a situation where consumer spending has grown while the consumer share of total pharmaceutical costs has fallen.


 

CONSUMERS ESTIMATES OF THE AMOUNT OF OVERALL U.S. HEALTHCARE SPENDING  COMPRISED BY PRESCRIPTION DRUG COSTS

SOURCE: PricewaterhouseCoopers' Health Research Institute

 

PRESCRIPTION DRUGS AS A PERCENTAGE OF NATIONAL HEALTH EXPENDITURES

Source: Burrill & Company

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