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Department of Insurance issues report on the impact of prescription drug costs on health insurance premiums

News: 2019 Press Release

For Release: January 2, 2019
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Department of Insurance Issues Report on the Impact of Prescription Drug Costs on Health Insurance Premiums

SACRAMENTO, Calif. — The California Department of Insurance (CDI) issued its first Prescription Drug Cost Transparency Report as required by Senate Bill 17 (Hernandez) today. The report compiles information submitted by nine health insurers in California about covered prescription drugs, including prescription drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, and include the following drug categories: generic, brand name, and specialty. CDI-regulated insurers reported to the department the 25 most frequently prescribed drugs, the 25 most costly drugs by total annual plan spending, and the 25 drugs with the highest year-over-year increase in total annual plan spending for calendar year 2017 for individual and group coverage. This mandated reporting by insurers is meant to demonstrate the overall impact of drug costs on health insurance premiums in California.


“Our Prescription Drug Cost Transparency Report is an important first step toward providing more information for consumers and policymakers regarding the cost of drugs,” said Commissioner Jones. “More work needs to be done by policymakers to address the rising cost of drugs which significantly contribute to overall healthcare costs and health insurance premiums.”


Notable Findings:

  • These CDI regulated health insurers and their policyholders spent more than $1.2 billion on prescription drugs in 2017.
  • Generic drugs comprise 84 percent of prescriptions and 21 percent of spending, while specialty drugs comprised only 3 percent of prescriptions, but 52 percent of spending.
  • The cost of prescription drugs (after considering rebates) is 13.6 percent of premiums.
  • The 25 most costly specialty drugs alone accounted for more than a quarter of the total annual spend for all drugs. 

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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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