Prescription drug coverage is offered under most health insurance plans, either as part of the basic coverage or as a specialty plan. Recently, there has also been increased media attention regarding the prescription drug policy that came into effect under Medicare. This type of health care coverage is aimed at protecting against the high costs that are often associated with prescription drugs.

Prescription Drug Plans

Prescription drug coverage pays for all, or part, of the cost of prescription drugs. Plans may differ in coverage of generic versus brand name drugs, with many plans building in a preference for cheaper generic drugs. Not all prescription drugs are covered in any given plan. Some plans make drugs available through mail delivery. Plans can also make online sites available for plan members to order prescriptions and monitor shipments. Some plans have restrictions on the pharmacies that can be used for obtaining the prescription drugs. Coverage under most of these plans will be limited if there are current health problems involving high prescription expenses.

These plans have a variety of costs, including: basic premiums, deductibles, and co-payments. Typically, premiums can be lowered if the insured elects higher deductibles or co-payments.

Medicare Prescription Drug Coverage

Everyone covered by Medicare was eligible for prescription drug coverage beginning January 1, 2006. There are several different Medicare plans available, such that consumers must evaluate which plan is best suited to their needs. Pharmacies contract with each plan, so consumers need to determine if a given plan has a contract with a convenient pharmacy. The Medicare plans cover both generic and brand name drugs. Everyone on Medicare is eligible for this coverage, regardless of income, health status, current health problems, or current prescription expenses.

There is a monthly payment plan, along with a yearly deductible. In addition, there are required co-payments. Those amounts vary according to the precise Medicare plan that the consumer chooses. People with low incomes may qualify for free coverage.

Cost of Prescription Drugs

Concern over prescription drug coverage has been prompted by the spiraling costs of prescription drugs. Drug costs are increasing across the board. However, one of the forces behind major cost increases is that the types of drugs being used have been changing. It is increasingly the case that newer, higher-priced brand name drugs are used in various treatments. In those cases, generic equivalents are not yet available because the companies that developed the drugs still have valid patents. Advertising also plays a role in shifting consumer preferences to higher-priced brand name drugs.

Another factor behind the rise in drug prices is that the number of prescriptions filled has been rising steadily. A related factor is that a greater percentage of the population is using prescription drugs.

Retail prices for prescription drugs rose at triple the average inflation rate during the period from 1994 to 2004.