What imbalance exists in prescription drug spending, and how has it impacted overall costs?
Answered by 12 licensed agents
A recent report highlighted a stark imbalance where generic drugs, despite being 91.5% of prescriptions, only represent 12.9% of the drug spending, while brand-name drugs, at 8.5%, account for 87.1% of costs. This disparity contributed to an 11.4% increase in drug spending, reaching $450 billion, primarily due to rising costs for treatments of diabetes and obesity.
The only imbalance that occurs with a Medicare Advantage is IF their medications are not on that carrier's formulary. Otherwise many of the members medications will be covered and typically are $0 costs for a Tier 1 & Tier 2 medication
In 2025, Medicare eliminated the Part D Coverage Gap (a.k.a. Donut Hole). This now limits the consumer from spending over $2000 on all covered prescription drugs. However, not all plans may cover all of your medications, so ensure you verify Part D plan options in your zip code at www.Medicare.Gov.
Pricey name brand drugs take up way more money than cheap generics. Special meds, like for cancer, make it worse. This affects everyone, with folks often paying more than insurance does. This drives up drug costs big time, and lots of people can’t afford their meds, which can lead to bigger health issues down the road.
In 2025 there is an imbalance exists in prescription drug spending, because it uses to be four cost stages on a drug plan now it is only three cost stages. The deductible, initial coverage and catastrophic which comes when over 2000 has been spent on drug by client and plan. This means the client pay 0 dollars for rest of year which should be less than previous years.
The biggest imbalance, in my opinion, is Pharmacy Benefit Managers (PBMs). Most consumers aren’t even aware they exist. PBMs are the middleman between drug manufacturers and pharmacies. They negotiate all the pricing for the drug plans. They are a thorn in the side of many local pharmacies. Essentially, they are the ones who never seem to sacrifice, while the local pharmacies suffer.
Another recent issue that went into effect in 2025, is that the government has shifted the majority of the drug cost burden from themselves to the insurance companies, forcing them to cut other benefits in their plans and pass costs on to the consumer.
The deductibles and the co-pays have gotten a little bit out of hand because of the change with the coverage gap going away. It’s actually costing people more money in the long run.
Generic drugs in tier 1 and tier 2 are generally still $0 co-pay as long as your medications are on the plan's formulary. High-tier medications have co-pays up to the max out-of-pocket of $2,000. The highest medications are newly introduced medications or specialty medications.
Most Part D (prescription drug) plans now have a higher monthly premium and a deductible, where before there were a few with $0 to low premiums and a $0 to low deductible.
In the United States, we do not have a price negotiation system. This allows the drug manufacturers to set prices. We also don't use value-based pricing, where drug prices are determined by the value they offer to patients, leading to potentially overpriced drugs.
The biggest imbalance that I see is the overall cost of medications. Whether that cost is passed down to the consumer or the health insurance company. Lower medication costs mean both the consumer at the health insurance company keep money in their pockets. It’s obvious why this is important to the consumer. For the health insurance company, it means that money could be spent on other benefits and keeping plan copays low.
In general , “The primary imbalance in prescription drug spending lies in the disproportionate cost of brand-name drugs compared to generics. While the majority of prescriptions are for generic drugs, brand-name drugs account for the majority of spending. This imbalance, coupled with rising prices of new and existing brand-name drugs, leads to higher overall healthcare costs. “
