Prescription Drug Spend is Projected to Rise by an Average of 7.3% Annually

by the numbers

Expenditures on prescription drugs are currently one of the fastest rising costs within the healthcare industry.


The majority of the growth in drug spend is related to rising prices. In 2016, the U.S. Department of Health & Human Services identified two trends in drug spend consistent with what we are observing.


The amount spent on prescription drugs is rising faster than the amount spent on all healthcare. Over the next few years, prescription drug spend is projected to rise by an average of about 7% annually, while total health care spend is projected to rise at a slower pace of about 5%. This suggests that in the next several years prescription drugs are expected to comprise a greater share of all health care spend. Roundstone has seen this increasing trend over the past 3 years. The percent of claims from prescriptions jumped by about 50% from 2015 – 2017.


Expenditures on specialty drugs appear to be rising more rapidly than expenditures on other drugs.


Although fewer people take specialty drugs than more common medications, the high price tags on the specialty drugs can inflate costs at a rapid rate. The healthcare industry uses high cost as a common definition for specialty drugs, benchmarking a specialty tier threshold of $600 per month. As a percent of total drug expenditures, specialty drugs maintained an average of around 22% of all retail prescription drugs from 2009 – 2015. However, since 2013 the share comprised by high cost drugs has consistently increased, suggesting the upward trend will likely continue in subsequent years.


What does this mean for our employers?


The key to efficiently delivering prescription and specialty formulary drugs to employees, in a cost-effective way, is to be proactive in plan design. Our cost containment and underwriting teams work together with third-party administrators developing plans that make cost effective medications available to employees.



Abigail Riolo, M.Ed., MS
Data Analyst


As a Data Analyst with Roundstone, I work with Roundstone’s leadership, underwriting, claims and accounting teams to develop data-driven reports with actionable recommendations that help employers control their healthcare spend.





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