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Expand chart
Data: Peterson-Kaiser Health System Tracker; Graphic: Chris Canipe/Axios

The rising cost of prescription drugs is mostly falling to insurance companies and the government, while patients' out-of-pocket spending is holding steady.

Why it matters: This contradicts the narrative that the outrage over rising drug prices has intensified because consumers are shouldering more of those costs.

What pharma says: "The issue is really around, my perspective, that plans are systematically shedding risk as it relates to pharma and pharma costs," Steve Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, told Axios in an interview last month. "With regard to medicine, you’re exposed to a much higher degree of those out-of-pocket costs."

Between the lines: Overall, insurers and employers are shifting more costs onto employees through higher deductibles and copays. And even though they're absorbing the bulk of the increase in drug spending themselves, some consumers are paying significantly more.

  • Out-of-pocket costs for Medicare Part D grew by 13% between 2013 and 2016, according to Avalere. Over the same time period, the number of seniors who reached the "catastrophic" threshold for out-of-pocket spending rose by about 300,000.
  • Overall drug spending for those enrollees grew by 45%, meaning the taxpayers' tab spiked even more.

Why now: The Affordable Care Act insured millions of new people and required insurance to cover prescription drugs, steering some people's costs away from out-of-pocket spending and into insurance premiums.

  • The law's contraception mandate made a big impact. Between 2012 and 2014, birth control alone accounted for 63% of the drop in out-of-pocket spending among people with employer coverage, per the Kaiser Family Foundation.

Yes, but: Experts say there are still plenty of reasons to be angry about drug costs.

  • "At a minimum it says that the [average out-of-pocket] spending on drugs is not the only thing driving anger," said AEI's Ben Ippolito. "It could very well be that we have more people in the high spending category, and that engenders sympathy, etc."
  • "When you go to a hospital you see tons of investment all around you," he continued. "With pharmaceuticals you only ever seen the finished product — a product that costs effectively $0 to make now that we know how to. The R&D and future investment incentives don’t resonate. It’s an easy target."

Go deeper

School principals are not OK

Principal Alice Hom (purple jacket) of New York's Yung Wing School P.S. 124 near a vaccination van in November. Photo: Michael Loccisano/Getty Images

The overwhelming majority of secondary school principals experienced frequent stress last school year, according to a RAND Corporation report out Wednesday.

The big picture: The stress levels among female principals and principals of color were especially stark, with nearly 40% in these groups reporting constant job-related stress, compared to about 24% of male principals and 26% of white principals.

It's official: Stock market having worst start to year ever

Data: FactSet; Chart: Axios Visuals

It's been a decidedly ugly start to the year for the stock market, with particular pain in the tech trade.

State of play: As of the end of trading Tuesday — the 16th session of the year — 2022 is now, officially, the worst-ever start in the history of the S&P 500, according to data from Ned Davis Research, a stock market research shop.

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.