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Originally published in The Tennessean, May 2025

Today, we have a dozen new drugs that hit the market with manufacturer price tags at over $1 million for a one-time treatment. In Tennessee where the average income per year is around $36,000, that’s simply unaffordable. 

BlueCross BlueShield of Tennessee paid out $3.5 billion for drugs on behalf of its members last year. The average member fills 18 prescriptions a year – with even higher numbers among our Medicare populations.

It’s our most widely used benefit, especially compared with a handful of doctor’s visits an average member makes each year.  

At a closer look, high-cost specialty drugs make up 55% of that spending but only 2% of utilization. These drugs are costly due to exclusive manufacturing rights. Specialty drugs are complex to make, with many being “biologics,” which are made up of living organisms. But some specialty drugs have helped improve disease outcomes and quality of life in meaningful ways.  

Let’s be clear: providing access to safe and effective drugs is core to our purpose at BlueCross, but we also have to consider how they raise costs for everyone who pays for health coverage.

That includes members visiting the pharmacy and Tennessee businesses who are paying for their employees’ plans. But high-cost drugs aren’t the only factor.

So, what’s driving these costs? 

• Drug prices have consistently outpaced general inflation. Since 1985, overall drug prices have risen at rates three times faster than inflation. By 2024, drug prices were more than 127% higher compared to the cost of all other commodities. So, it’s no surprise that pharma leads the health industry with an average profit margin of around 15%, compared to 1-3% for not-for-profit insurers like us and roughly 5% for carmakers. 

• Drug companies spend billions of dollars every year on advertising and promotion, which drives up use of pricey treatments. This kind of advertising is only legal in the U.S. and New Zealand. And it leads to patients pressuring their doctors for brand name drugs they see in ads, even if they may not actually need it – or when lower cost alternatives that are just as safe and effective are available.  

Examining our health behaviors and culture towards disease management can also help us understand how we, as individuals, can address these issues. For example, we’re seeing increased rates of cancer, diabetes, obesity and other acute and chronic illnesses.

And we’ve almost doubled the average number of prescriptions per member since 2014. 

Today, medication use is often the primary treatment for these conditions – and understandably so. But most drugs also work best in conjunction with lifestyle changes like improving our diet or exercise habits. And in some cases, lifestyle changes can even reduce our dependence on medications. 

We also encourage our members to become active consumers in their health care decisions and offer resources that can help.    

• Generics and biosimilars are lower cost options that are just as effective. Choosing a generic and biosimilar over a brand name is the most effective way consumers can lower their costs – often by 80-85%. These drugs are highly regulated to be the same, and manufacturers often produce both the brand and generic or biosimilar drugs. 

• We provide formulary and drug cost information. While we don’t set the list price for drugs, we want our members to have that information so they can compare drug prices the way they might with other goods. Research shows people might skip doses or avoid filling prescriptions if they can’t afford them, so it’s important to know all the options. 

Simply put, becoming informed consumers in our health care journey is crucial.

By understanding medication coverage, comparing treatment options and asking about the cost of medications, we can make informed choices that align with our individual financial and health needs.