Drug prices were 5.5 times higher in 2024 than in 1985, according to Bureau of Labor Statistics (BLS) data, and their increases are outpacing general cost-of-living increases: The cost of medication has gone up three times as fast as the overall rate of inflation, with drugs targeting heart disease rising the fastest.
How are rises in drug costs measured?
The analysis is based on the producer price index (PPI), which is based how much a producer charges for a good. It’s one of the statistics used by the government to show how inflation affects prices over time. This is different from the consumer price index, which is based on how much consumers pay for a good.
Which medications have gotten more expensive?
Since 2002, prices for cardiovascular medications have risen more than any other drugs. A cardiovascular drug that cost $100 in January 2002 would cost about $455 in January 2025, according to BLS data. Most of these drugs treat heart disease, the most common cause of death nationwide.
Insulin and antidiabetic drugs have had the second-highest growth — a drug that cost $100 in January 2002 would have cost $442 in January 2025. Insulin costs reversed course in 2023, when the Inflation Reduction Act capped insulin costs for Medicare enrollees at $35 a month — from January 2023 to January 2025, the price of insulin dropped 16%.
How are drug prices determined?
Out-of-pocket drug prices depend whether the purchaser has insurance and, if they do, how much their plan covers. Public and private health insurance plans have covered an ever-increasing percentage of nationwide prescription drug costs — from 16% in 1970 to 68% in 2000 to 85% in 2022 — as updated legislation required many plans to increase prescription allowances and Medicare has added coverage.
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Private insurance plans negotiate prices with drug manufacturers and wholesalers and, as of 2022, Medicare can do the same for drugs that have a high total cost to the federal government, don’t have a generic alternative, and have been approved by the Food and Drug Administration (FDA) for at least seven years.
Generic alternatives to brand name drugs can also lower prices, according to the FDA. New drugs usually start out with patent protection, so they can’t be replicated by another company. Once patents for these branded drugs expire, the FDA can approve one or more generic alternatives, which must work the same way as the brand-name version. These generics tend to be cheaper to manufacture because they require less research and testing to demonstrate safety, so they create competition that drives prices down.
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Page sources and methodology
All of the data on the page was sourced directly from government agencies. The analysis and final review was performed by USAFacts.
Bureau of Labor Statistics
Producer Price Index
