Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Utilization and Spending

04/01/2000

In Chapter 2, various data were presented that showed spending differences between individuals with and without insurance coverage for prescription drugs. Here we consider those same comparisons within regions. Because size of prescription may vary due to differences in local medical practice patterns and variations in state Medicaid regulations on prescription size, neither average number of prescriptions nor average prescription prices are particularly good measures for regional comparisons. Rather, we compare spending and use rates by region using MEPS data.

Table C-2 shows that expenditures on prescription drugs vary somewhat between geographic regions. Residents of the Midwest and South appear to have the highest average drug spending per person while spending for residents in the West and Northeast appears somewhat lower. Generally, we would expect average spending to be higher where coverage is higher, yet the South has the lowest coverage rate and relatively higher spending than two other regions. Use rates – percent of people with at least one prescription – vary in a similar pattern to average drug spending.

Region Average Rx Spending per Capita Average Spending for Those With Coverage Average Spending for Those Without Coverage Percent With at Least One Prescription Average Rx Spending per User Average Health Spending
Table C-2: Prescription Drug Utilization and Spending, Total Population, by Region, 1996
National $265 $315 $103 65.2% $406 $2081
Northeast $232 $284 $74 64.5% $360 $2228
Midwest $305 $341 $120 68.0% $448 $2435
South $285 $333 $132 66.2% $431 $1947
West $220 $282 $61 61.3% $358 $1795
Source: Center for Cost and Financing Studies, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996

The difference in average total spending on drugs for those with and without coverage varies by region as well. Nationally, the uncovered spend about a third as much as those with coverage for prescription drugs. In each region, a similar relationship persists. But the magnitude of the difference varies. In the South, those without coverage spend about 40 percent as much as those with coverage, while in the West, those without coverage spend only 22 percent as much as those with coverage.

Interestingly, drug spending seems to vary somewhat differently across regions than total health spending. Although the West is the lowest on both measures and the Midwest is the highest, the average total health spending in the South is relatively lower while average drug spending is relatively higher and the opposite is true for the Northeast.

As discussed in Chapter 2, total drug spending is a combination of the price, volume and mix of drugs used. Further analysis will be needed to determine the role these factors play in regional differences in prescription drug spending.

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