U.S. States Ranked by Total Prescription Charges

According to a 2019 poll, 24 percent of people taking prescription drugs said that it was difficult to afford their medications. The average American spends $1,200 on prescription drugs each year—more than any other country in the world.

Unfortunately, this prescription drug spending is only expected to increase. The Centers for Medicare and Medicaid Services (CMS) projects that prescription drug spending will increase by 6.1 percent each year through 2027.

Why are prescription drug costs so high in the United States? Specialty pharmaceuticals and oncology treatments have contributed in part to rising drug costs. Targeted, experimental drugs like these require a tremendous amount of research and testing to develop. Because of the resource-intensive development process, these drugs often come with a high price tag.

Some of these costly specialty drugs include immunosuppressive therapies like Humira or Stelara. Both are biologic drugs intended to treat autoimmune diseases like plaque psoriasis or arthritis. Insulin brands like Humalog and Novolog are also among the top 20 drugs by total charges.

High drug prices are largely dictated by the pharmaceutical supply chain. This supply chain contains three key players:

• Drug manufacturers
• Pharmacy benefit managers, and
• Payers

How can healthcare organizations use drug cost data?

How are drug prices determined?

Drug manufacturers price their treatments based on the product’s estimated value. There are few regulations to govern pharmaceutical pricing. This means that the manufacturer list price could be as high as $71,306 dollars for a single treatment.

Lack of pricing regulation is one reason why insulin costs increase each year. With a high market demand and few generic competitors, insulin manufacturers can continue raising prices.

The costs Americans actually pay for prescriptions depends on many factors, including:

• Their insurance plan
• The list of drugs covered by that plan
• The size of their deductible, and
• The discount that the insurance company received from the drug manufacturer

With so many variables at play, out-of-pocket drug costs can be extremely unpredictable. Below, we’ve compiled the 25 states with the highest and the lowest total pharmaceutical charges.

Which U.S. state has the highest total prescription charges?

California has the highest total prescription charges. The state reported $30.2 billion in total charges in 2019. This is the amount charged to insurance companies for the cost of 59.9 million prescriptions filled for 6,318 different drugs.

Texas and New York have the second and third highest total prescription charges. These three states—California, Texas, and New York—are among the largest states by population size. Population size has a strong impact on total prescription charges. With a greater number of patients to care for, providers write more prescriptions. This means that providers in large, populous states are more likely to have higher pharmaceutical charges than providers in smaller states.

It’s also worth noting that California, Texas, and New York are home to some of the nation’s top hospitals, according to U.S. News & World Report. Many of these top hospitals are academic research facilities or specialized cancer research centers. These types of hospitals are more likely to administer costly, experimental drugs to their patients. Drugs of this kind certainly impact total prescription charges.

Which U.S. state has the lowest total prescription charges?

Wyoming has the lowest total prescription charges in the United States. In 2019, Wyoming reported just over $377 million in total charges. With a population of only about 579,000 residents, Wyoming has the smallest population of all U.S. states. This small population size is likely a strong contributing factor in the state’s low prescription charges.