Spending on Prescription Drugs Has Been Growing Exponentially over the Past Few Decades

Mar 26, 2023

Prescription drugs play a vital role in the U.S. healthcare system, enabling Americans to live longer, higher-quality lives. However, the growing cost of those drugs presents a challenge to the quality and affordability of healthcare in the United States.

U.S. spending on prescription drugs has risen substantially in the past 20 years, climbing from $141 billion in 2001 to $378 billion in 2021. Furthermore, the Centers for Medicare and Medicaid Services project that such spending will continue to grow, rising to $592 billion by 2031 — an increase of 57 percent.

That growth in spending can be attributed to many factors, including the number and type of drugs prescribed. Some common reasons include:

High and rising prices for brand-name drugs;
a lack of competition due to the U.S patent system;
the use and cost of specialty drugs; and
a lack of transparency in drug prices.

While prescription drugs can help improve health outcomes in the United States, the rising cost of those drugs can place a financial strain on American families and the country’s fiscal health. Containing prescription drug costs is important to consider for improving the U.S. healthcare system and addressing the nation’s long-term fiscal challenge.