The most commonly cited data on prescription drug spending come from the National Health Expenditures (NHE) accounts compiled by CMS.2 The NHE accounts track annual spending by all payers for prescription drugs purchased in retail settings, such as pharmacies, mail-order outlets, grocery stores, warehouse clubs, and similar businesses. The NHE data do not include drugs dispensed in institutions including hospitals, long-term care facilities, and clinics,3 nor do they include over-the-counter products such as aspirin purchased without a prescription.4
According to the most recent NHE data, the United States spent $328.6 billion on prescription drugs in 2016 and a forecast $338.1 billion in 2017, or 10% of predicted 2017 national health care spending of $3.5 trillion.5 Prescription drug spending is forecast to rise to about 11% of national health care spending by 2027 (see Figure 1). Retail drug spending has ranged from about 5% to 10% of total health care expenditures since 1960, when the NHE accounts began compiling prescription spending data.6 (See “How Does 2016 Drug Spending Compared to Other Years?”) Because the NHE data provide information about retail drug sales only, a number of analysts say the data do not offer a complete picture of U.S. drug spending. The Department of Health and Human Services (HHS) in April 2016 issued a study that attempted to estimate total U.S. prescription drug spending—retail plus institutional use in hospitals and other health facilities
