Why prescription drug costs keep rising

Prescription drug costs are a real concern for families and employers. New treatments are improving care, but they’re also expensive to bring to market. Some pharmaceutical industry practices can delay competition from lower-cost generic and biosimilar medicines, keeping prescription drug prices higher for longer.

No single organization can solve this alone. Blue Cross and Blue Shield (BCBS) companies, which provide coverage to nearly 116 million Americans, have a unique ability to bring together providers, employers, policymakers and others to tackle these challenges and help make healthcare more affordable. In this conversation, Sean Robbins, chief operating officer at Blue Cross Blue Shield Association (BCBSA), breaks down what’s behind rising costs and how the Blues are working to make medications more affordable.

Key Facts

• Prescription drug spending grew 10% in 2024, outpacing many other areas of healthcare spending and contributing to higher healthcare costs.
• Prescription drugs make up about one-quarter of healthcare spending for employers.
• Blue Cross and Blue Shield companies cover nearly 116 million Americans — about one in three people nationwide — and negotiate lower healthcare and prescription drug costs on behalf of members.
• High launch prices for new medicines and delayed competition from generic and biosimilar alternatives are key factors driving prescription drug costs higher.
• CivicaScript®, supported by Blue Cross and Blue Shield companies, has helped generate nearly $44 million in savings for patients and participating health plans by increasing access to lower-cost medications.

Why is healthcare affordability such a challenge?

Health insurance costs reflect the underlying cost of care. Whether it’s prescription drugs, doctor visits or hospital stays, the cost of healthcare continues to rise…and families and employers are feeling that impact every day. Healthcare affordability is really about kitchen table economics — the real-world impact healthcare costs have on household budgets. When healthcare costs go up, families have less money for everything else that matters.

And we understand that frustration because we’re experiencing it too. We’re not just healthcare leaders. We’re parents, spouses, caregivers and patients ourselves. We're constantly working to bring down the cost of pharmaceuticals and care delivery in physician and hospital settings.

We have a deep commitment to bending the cost curve. As a health insurance provider, we represent the members who entrust us with their dollars to go fight for the best possible prices on their behalf. And we take that responsibility very seriously.

What role do the Blues play in addressing those costs?

We have a responsibility to the nearly 116 million people who count on Blue Cross and Blue Shield coverage. One of the most important things we do is negotiate on their behalf, across the full spectrum of services that add up to the healthcare costs we all have to pay. That negotiation isn’t always something consumers see directly. But every dollar we save through better negotiations and smarter solutions is a dollar that can stay in a family’s household budget.

Think about someone facing a cancer diagnosis. Treatments like chemotherapy and immunotherapy can mean better outcomes and more time with family. Specialty drugs, including many cancer treatments and other advanced therapies, are growing faster than any other segment of pharmaceutical spending. That growth is part of what’s driving higher healthcare costs, and in turn, higher health insurance premiums.

Through efforts like Synergie Medication Collective^®, we're able to use the power of the Blue System to negotiate with pharmaceutical companies. That helps slow the growth of some of the most expensive drug costs, especially for people facing serious illnesses who have enough to worry about without wondering whether they can afford their treatment.

And importantly, 100% of the savings we're negotiating through Synergie efforts are passed right back to members.

How do prescription drug costs add to the broader cost of care?

Prescription drugs are a growing part of what families, employers and health plans spend on healthcare. It's also the fastest growing area of healthcare spending and has been for many years.

It’s important to recognize the incredible innovation happening across the pharmaceutical industry. Many new therapies are changing lives. But the healthcare system is complex. And that complexity can create inefficiencies and competing interests that drive up costs and put treatments out of reach for many patients.

Prescription drug costs are rising because of several factors, including high launch prices for new medications, extended market exclusivity for some brand name drugs and delayed competition from lower-cost generic and biosimilar alternatives.

The launch prices of new prescription drugs have more than doubled over the last four years. For employers providing health insurance coverage, prescription drugs make up about 25% of healthcare spending. Because premiums reflect the underlying cost of care, those increases have a big impact on what people pay for coverage.

What are the Blues doing differently to help address those rising drug costs?

One of the clearest examples is CivicaScript^®, where we came together with pharmacies and the insurance industry to identify pharmaceuticals that are widely used and have no reason to be as expensive as they are, like insulin.

Insulin has been around for decades, yet too many people still struggle to afford it. The technology is 75 years old, but prices continue to increase.

Through CivicaScript, insurers and providers said enough is enough. Now we can deliver insulin at $55 per box of pens. That's a meaningful difference for people who depend on insulin every day. When someone can spend less on the medication they need, that means more room in the household budget for groceries, childcare or other household expenses.

What does progress on affordability look like today?

We’re making progress, but there’s still a long road ahead. With new technology and strong partnerships, we are in a position to upend the model as it currently exists to deliver pharmaceuticals at lower prices by changing how they’re manufactured and delivered.

More and more people across healthcare — from policymakers to industry leaders — recognize that the status quo isn’t sustainable and that we need to work together on new solutions. This will take time, but it’s a necessary effort to deliver more medications at prices people can actually afford.

At the end of the day, affordability isn’t just about healthcare…it’s about kitchen table economics. When healthcare costs go up, families have to make harder choices about everything else in their lives. When we can help bring those costs down, it means more money for groceries, education, transportation and the things that matter most to their families. That’s why this work matters.