Prescription drug spending continues to rise, but individuals footing a smaller percentage of the bill.

Spending on prescription drugs in the United States rose to $200.7 billion in 2005, about five times its level in 1990, according to new data from the Henry J. Kaiser Family Foundation. While prescription drug spending still represents only about 10 percent of healthcare spending, it has been among the fastest growing components, said the Menlo Park, California-based nonprofit research institute. That rate of growth—as much as 18 percent in 1999—has slowed to just 6 percent in 2005, thanks to a decline in Medicaid spending, growth in the use of generic drugs, changes in the types of drugs used and a decrease in the introduction of new drugs. For consumers, the news hasn't been all bad. Consumers' out-of-pocket expenses fell to 25 percent in 2005 from 56 percent in 1990, as the share covered by private health insurance rose nearly doubled to 47 percent during that period. Medicare's new Part D prescription program will continue to reduce the percentage of costs borne directly by consumers while it will raise government spending to a projected 39 percent from just 18 percent in 1990. The trend moving forward should continue to see drug costs rise. The Department of Health and Human Services expects prescription drug spending to more than double from 2005 levels to $497.5 billion in 2016, when it will represent 12 percent of overall health care compared to the 10 percent in 2005.

PERCENT OF TOTAL NATIONAL PRESCRIPTION DRUG EXPENDITURES
BY TYPE OF PAYER, 1990-2005 ACTUAL, 2006 PROJECTED