4 reasons why prescription drugs cost so much

Everywhere you go it seems like things cost more these days, from groceries to gas. But when it comes to prescription drugs, prices have been rising at an alarming rate.

Consumers are often unaware of how much their prescriptions actually cost. Under most health plans, you’re required to pay a set copay amount for your prescription, not the full cost. If the drug company raises the price of the drug, the increase is largely absorbed by your employer or insurance company. Eventually, it’s passed along to you in the form of higher premium costs.

Here are four reasons why prescription drugs cost so much:

Research and development

There is a long process of research, development, and clinical trials that must take place before a drug can be approved by the Federal Drug Administration and make it to your local pharmacy.


With every new drug a company is researching, they must first apply for a patent with the federal government. Manufacturers only have a certain number of years to have an exclusive patent for a drug. Until the patent expires, only one company is able to manufacturer that particular medication. Once the patent expires, other companies are able to market the drug as a generic. Generic drugs are priced lower because of lower development costs, a limited need for marketing and increased competition.


Drug companies spend a large amount of money advertising directly to you – you can’t watch a TV show without seeing an ad – and to doctors. Last year, 
the Washington Post reported that drug companies spent $4.5 billion on advertising to consumers alone. Advertising can lead to consumers using more expensive drugs and higher overall costs to our health care system.

Open pricing

The United States allows drug companies to set their own prices for drugs with little regulation. Because of this, 
U.S. prescription drug costs are some of the highest in the world.

What can you do about increasing drug prices? Educate yourself on how the health care system works. Blue Cross and Blue Shield of Nebraska's pharmacy benefits partner, Prime Therapeutics, has a website loaded with interactive tools to help manage your family's prescription drugs; check out 
myprime.com to find prices for your medicine and learn about ways to keep costs down by selecting generics.

The more you know, the better you'll be at spending your health care dollars as effectively as possible.

By Casey Koch, Managed Care Pharmacy resident at Blue Cross Blue Shield of Nebraska.



The percentage of the bill you pay after your deductible has been met.


A fixed amount you pay when you get a covered health service.

Tiered benefit plan

A health care plan featuring multiple levels of benefits based on the network status of a particular provider. 


The annual amount you pay for covered health services before your insurance begins to pay.

emergency care services

Any covered services received in a hospital emergency room setting.


Includes behavioral health treatment, counseling, and psychotherapy

in-network provider

A provider contracted by your insurance company to accept an agreed upon payment for covered services. 

OUT-OF-network provider

A term for providers that aren’t contracting with your insurance company. (Your out-of-pocket costs will tend to be more expensive if you go to an out-of-network provider.)


Your expenses for medical care that aren’t reimbursed by insurance, including deductibles, coinsurance and co-payments.


If you can afford health insurance, but choose not to buy it, you must have a health coverage exemption or pay a tax penalty on your federal income tax return.


The amount you pay to your health insurance company each month. 

Preventive services

Health care services that focus on the prevention of disease and health maintenance.


Services and devices to help you recover if you are injured or have surgery. This includes physical, occupational and speech therapy.

special enrollment period

The time after the Open Enrollment Period when you can still purchase health insurance only if you have a qualifying life event (losing other health coverage, having a baby, getting married, moving).


A physician who has a majority of his or her practice in fields other than internal or general medicine, obstetrics/gynecology, pediatrics or family practice.