Healthcare Insights

25 states with the highest total prescription drug spending

Drug spending data can be helpful for certain healthcare organizations interested in the pharmaceutical market. Pharmaceutical companies, for example, use drug spending data when developing new drugs or therapies. This data helps drug manufacturers see how competitors are pricing their products and may help to inform the pricing strategy for a new drug.

The heatmap below shows which states had the highest and lowest prescription drug spend. This data was gathered using Atlas Prescription Claims for the calendar year 2022.



U.S. states with the highest percentage of prescription drug spend

RankState% of prescription drug spend by U.S. state Explore dataset
Texas 8.5% Explore
California 8.3% Explore
New York 5.8% Explore
Florida 5.6% Explore
Pennsylvania 5.4% Explore
Ohio 5.4% Explore
Michigan 4.8% Explore
Illinois 3.7% Explore
Georgia 3.7% Explore
10 Tennessee 2.7% Explore
11 North Carolina 2.6% Explore
12 Kentucky 2.6% Explore
13 New Jersey 2.4% Explore
14 Virginia 2.4% Explore
15 Washington 2.3% Explore
16 Indiana 2.2% Explore
17 Arizona 2.0% Explore
18 Alabama 2.0% Explore
19 Louisiana 1.9% Explore
20 Colorado 1.8% Explore
21 Missouri 1.6% Explore
22 Minnesota 1.5% Explore
23 Wisconsin 1.3% Explore
24 Maryland 1.3% Explore
25 South Carolina 1.2% Explore

Fig. 2 Data is from Definitive Healthcare’s Atlas Prescription Claims for PhysicianView for calendar year 2022. Accessed May 15, 2023.

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

From the heatmap and the table above, we can see the 25 states with the highest percentage of prescription drug spend by the end of 2022.

Texas tops the list with the highest percentage of prescription drug spend at 8.5%.

California follows closely behind with an 8.3% prescription drug spend.

And New York comes in third with a prescription drug spend of 5.8%. These three states— Texas, California, and New York—are among the largest states by population size.

Population size has a substantial impact on total prescription charges. With a large patient population, providers need to write more prescriptions. This means that healthcare providers in large, populous states are more likely to have higher pharmaceutical charges than healthcare providers in smaller states.

It’s also worth noting that Texas, California 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 medical centers or specialized cancer research centers, which are more likely to administer costly, experimental drugs to their patients. Drugs of this kind certainly drive up total prescription charges.

Why are prescription drug prices rising in the United States?

According to a 2021 Gallup poll, an estimated 18 million Americans cannot pay for needed drugs. The average American spends over $1,300 on prescription drugs each year—more than any other country in the world.

Unfortunately, this prescription drug spending is expected to increase. The Centers for Medicare and Medicaid Services (CMS) projects that prescription drug spending will increase at an annual rate of 5.4% each year through 2028.

According to multiple studies, medical advancements in specialty pharmaceuticals and oncology treatments is a primary contributor to rising drug costs. Targeted, experimental therapies 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.

Additionally, drug utilization can contribute to rising drug prices. Both medication overutilization and medication nonadherence can drive up drug prices and overall healthcare costs. The delay in introducing generic drug options to market is another factor that causes higher prices.

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Healthcare Insights are developed with healthcare commercial intelligence from the Definitive Healthcare platform. Want even more insights? Start a free trial now and get access to the latest healthcare commercial intelligence on hospitals, physicians, and other healthcare providers.