Prescription Drug Out-of-Pocket Costs

Trends in Out-of-Pocket Spending and Regulation

For many rare disease patients, their out-of-pocket costs have grown significantly in recent years, as insurance companies are increasingly shifting the cost of prescription drugs onto patients by raising deductibles,¹ increasing patient cost-sharing,² and changing plan design.³ These actions can have grave consequences. Exorbitant out-of-pocket costs can force patients to go without their medication or to use alternative treatments that are not as safe and effective. For example, according to the Kaiser Family Foundation, 26% of all adults’ report difficulty affording their prescription drugs. Of those who were unable to afford their drugs, three in ten say they have not taken their medicine as prescribed due to cost.⁴

In recent years, there has been a push in state legislatures to assist patients with increasingly high prescription drug out-of-pocket costs, and states have explored different types of legislation with varying impacts on patients’ out-of-pocket spending. It is important to note that state lawmakers do not have authority over all forms of health insurance. For the purposes of this report, the analysis of out-of-pocket cost protections focuses solely on state-regulated health insurance plans.

1. https://www.kff.org/health-costs/report/2021-employer-health-benefits-survey/
2. https://www.rwjf.org/en/library/research/2021/06/marketplace-pulse-cost-sharing-in-the-marketplace-2021.html
3. https://www.healthaffairs.org/do/10.1377/hblog20200212.537849/full/
4. https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/

Grading Methodology

NORD evaluated state out-of-pocket patient protections on the following:

1. Deductible Protections: States can help protect patients by ensuring there is no deductible to meet for prescription drug costs or by having a limited separate prescription drug deductible.
2. Prescription Drug Cost Caps: States may cap the amount that a patient pays per month per drug or create a fixed copay option that is a flat amount that applies to all prescription drugs.
3. Standardized Benefit Plan Design: The Affordable Care Act (ACA) created health insurance marketplaces through which individuals may purchase health insurance that meets the standards of quality coverage under the ACA. States have the flexibility to set additional standards, including creating a standard benefit design to allow consumers to compare their health insurance options more easily. These standardized designs allow individuals to do an apples-to-apples comparison of prescription drug cost-sharing requirements.
4. Separate Annual Prescription Drug Cost Protections: States may place a limit on the amount a patient pays on prescription drugs per year.
5. Ban on Copay Accumulator Adjustment Programs: Many patients rely on copay cards to help pay for their prescriptions. However, in recent years insurers are no longer counting funds from copay cards towards a patient’s deductible. Some states have taken action to ban what is now called “copay accumulator adjustment programs” that limit those funds counting towards a patients’ cost-sharing requirements.
6. Applicability of Prescription Drug Out-of-Pocket Protections (not graded, included for informational purposes only): Prescription drug protections that states enact may apply to the entire state-regulated market or to a partial subset of the state-regulated market. This ungraded section includes information on the portion of the state-regulated market to which the enacted protections apply.

The greater the number of protections states have enacted from above, the higher their grade.

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