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10 States with the Highest and Lowest Drug Costs

July 24, 2019 BY Alanna Moriarty

10 States with the Highest and Lowest Drug Costs

Pricing is one of the most important decisions a pharmaceutical company can make when a drug is approved for distribution. The cost of medication has a significant influence on factors like patient access, reimbursement rates, prescribing patterns, and successful market penetration.

Prescription drugs generated over $250 billion in revenue in 2014 alone, primarily through incremental price hikes. According to the American Medical Association (AMA), the U.S. now spends roughly $334 billion on prescription medication every year. In 2017, pharmaceutical spending accounted for 10 percent of national healthcare spending, up from 5.6 percent in 1990.

One major factor in rising drug costs is the sheer pricing power of pharmaceutical companies. There is very little regulation of prescription drug pricing and, if market saturation is low, companies can charge at their own discretion. Uniqueness of a drug and its formula also has significant impact on pricing due to patent laws. Even once a generic version of a drug is released, drug makers can modify the formula of the original drug and apply for a new patent. This also applies to methods of administration: distinct patents can be filed for the same drug in the form of pills, patches, injections, and others.

Below, we've compiled lists of the 10 states with the highest and lowest total prescription drug costs.

10 States with the Highest Drug Costs

Rank State Total Drug Costs # of Prescriptions Days of Supply
1.  CA $11,402,355,870 114,502,330 5,392,448,102
2.  NY $8,910,440,547 79,741,810 3,410,658,850
3.  FL $8,254,695,797 91,405,043 4,320,311,916
4.  TX $7,940,722,668 79,526,352 3,682,044,571
5.  PA $5,679,842,770 63,881,380 2,656,141,844
6.  OH $4,805,554,743 55,687,691 2,408,207,745
7.  NC $4,111,637,790 46,203,123 1,928,819,278
8.  MI $4,005,707,778 42,359,608 1,999,952,059
9.  IL $3,810,963,787 43,723,476 1,985,101,933
10.  GA $3,564,754,981 42,331,124 1,650,356,762

Fig 1 Prescription drug costs data is from Definitive Healthcare's platform on Physicians. Intelligence taken in part from CMS Medicare Part D Prescriber Public Use File for calendar year 2017, the most recent available.

California topped the list of states reporting the highest total prescription drug costs with $11.4 billion. Unsurprisingly, it is also the state reporting the greatest number of prescriptions issued by volume, as well as days of supply. An interesting note is that New York ranked second for highest drug costs, but reported fewer prescriptions by volume than Florida (third highest drug costs), and fewer days of supply than both Florida and Texas (fourth highest drug costs).

Logically, a greater volume of prescriptions would lead to higher total drug costs. However, this can be heavily influenced by demand-based pricing, as well as the prevalence of rare diseases in a state like New York, which is both highly populated and also a center for innovative healthcare treatments. This combination is likely why New York reports the second highest drug costs despite ranking lower in prescription volume and days of supply.

10 States with the Lowest Drug Costs

Rank State Total Drug Costs # of Prescriptions Days of Supply
1.  AK $82,834,522 891,984 33,199,162
2.  WY $109,610,409 1,515,505 68,095,116
3.  DC $241,083,189 1,544,829 67,970,031
4.  VT $213,528,123 2,296,101 111,185,092
5.  ND $233,014,883 3,193,276 130,499,028
6.  DE $373,269,241 3,315,138 172,676,150
7.  HI $389,644,209 3,391,595 177,557,732
8.  MT $296,156,388 3,567,065 159,706,663
9.  SD $279,184,854 3,733,334 152,552,650
10.  NH $416,311,094 4,612,552 211,582,028

Fig 2 Prescription drug costs data is from Definitive Healthcare's platform on Physicians. Intelligence taken in part from CMS Medicare Part D Prescriber Public Use File for calendar year 2017, the most recent available.

Alaska ranked last by total drug costs, reporting just under $83 million for calendar year 2017. As the state with the least dense population, this is unsurprising. With fewer than one million prescriptions issued, Alaska reported issuing slightly more than half the number of prescriptions as Wyoming, which ranked second-lowest by drug costs.

Looking for more ways to leverage drug costs and other pharmaceutical data? Definitive Healthcare's Physicians platform contains the drug market analytics your business needs to succeed when selling to healthcare providers. With our comprehensive intelligence, your team can:

  • Analyze prescribing patterns and drug volumes from physicians and facilities.
  • Access affiliations and understand who the decision-makers are for care centers or health systems.
  • Identify regions and facilities with the highest diagnosis and procedure volumes.

Want to see how else our platform can help you achieve your business goals? Sign up for your free trial today!

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