Drug Spending Research Initiative

Prescription drug costs in the United States are increasing, with spending growth continually outpacing that of all other parts of the health care sector. Net spending on pharmaceuticals alone is expected to reach nearly $400 billion by 2020, up from $310 billion in 2015.   

Patients bear the burden of rising pharmaceutical costs in several ways, including higher insurance premiums and increased out-of-pocket costs, which can limit access to needed therapies. Taxpayers also shoulder the financial burden as spending increases in public programs such as Medicare and Medicaid.  

Multiple factors are driving these growing costs. Historically, U.S. health care has tended to adopt drug therapies when they provide additional clinical benefit compared to existing treatments, independent of the cost of the product. Today, a growing share of therapies entering the market are expensive pharmaceuticals designed to treat complex, chronic conditions, such as cancer and autoimmune diseases. These products, known as specialty drugs, currently make up 37 percent of drug costs but account for less than 2 percent of all prescriptions.

Existing pharmaceuticals are also contributing to rising drug spending, with manufacturers choosing to raise prices on many drugs year after year, including those with multiple therapeutic alternatives, such as treatments for multiple sclerosis and rheumatoid arthritis.

The Pew Charitable Trusts’ drug spending research initiative seeks to understand the underlying drivers of rising drug costs and identify policy options to better manage spending on these products in ways that help to ensure that patients have access to needed treatments.

Our Work

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  • Payment Policies to Manage Pharmaceutical Costs

    In recent years, the high cost of prescription drugs in the United States has been the subject of much public discussion. While attention has been focused on a few instances of what critics see as the most outrageous price increases, policymakers should also recognize that Americans spend twice as much per person on prescription drugs as do people in other high-income countries. Clearly, the... Read More

  • Payment Policies to Manage Drug Costs

    U.S. policymakers and patients continue to grapple with rising pharmaceutical spending, which accounted for $310 billion in 2015, an increase of almost 9 percent from the previous year. And costs are expected to continue to rise as high-priced brand-name and specialty medications hit the market. New branded drugs accounted for $24 billion in spending in 2015, while Medicare costs for specialty... Read More

  • Pew Discusses Rising Drug Costs Before House Energy and Commerce Subcommittee

    On March 2, Allan Coukell, senior director of health programs for The Pew Charitable Trusts, testified at the House Committee on Energy and Commerce, Subcommittee on Health’s hearing, “Examining FDA’s Generic Drug and Biosimilar User Fee Programs.” His remarks focused on the challenge of rising pharmaceutical costs, and opportunities to reduce spending, such as increasing... Read More

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