Prescription Drug Prices Are Driving Up Health Insurance Costs—Here’s What We Can Do
Tricia Keith
| 2 min read
Tricia Keith is President and CEO of Blue Cross Blue Shield of Michigan.
Prescription drug prices in the U.S. are skyrocketing—and they’re placing immense pressure on the entire health insurance system.
For our members, that pressure often shows up at the pharmacy counter as higher out-of-pocket costs or changes in drug coverage. But what’s less visible is how unregulated, unpredictable prices are also driving up the cost of health insurance premiums.
Consider:
▪ 21% of each health care dollar Blue Cross collects in premiums is going to prescription and specialty drugs.
▪ In 2023, the five largest U.S. pharmaceutical companies by market cap — Eli Lilly, Johnson & Johnson, Merck, AbbVie and Pfizer — reported combined earnings of $81.9 billion in 2022, an $8 billion increase from just two years prior.
▪ Blue Cross Blue Shield of Michigan lost over $1.7 billion in 2024 as our claims payments for drugs grew by 15%– five times faster than inflation.
Pharmaceutical companies set prices without justification or limits. They enjoy years of patent protection that keeps lower-cost competitors out of the market. This places the burden on insurers and employers to absorb the cost – which impacts the premiums of employers and families who are already stretched thin.
At Blue Cross Blue Shield of Michigan, we believe this must change.
We’re using every tool we have to lower what our members pay. That includes negotiating directly with drug manufacturers, offering price comparison tools, and advocating for the use of lower-cost alternatives when appropriate. But those efforts alone haven’t been enough.
The truth is, the pharmaceutical industry operates without the kind of oversight on pricing that exists in nearly every other part of health care. There’s no requirement to justify year-over-year price hikes. No accountability for how those prices impact patients or payers. And no guardrails to prevent excessive costs from undermining the broader goal of affordable care.
That’s why Blue Cross is calling for a better system—one that brings transparency, oversight and fairness to drug pricing. We believe fair regulation is essential to protecting patients and stabilizing costs for everyone.
Through our new platform at MIBlueDaily.com/Affordability, we are sharing more about how we’re confronting this challenge—from tools that empower members, to advocacy for policy change, to partnerships aimed at long-term solutions.
It’s time every part of the health care system, including the pharmaceutical industry, does its part to make health care more affordable.
