In 2023, U.S. retail prescription drug market value grew 11.4% to $449.7B, about 9% of total health care outlays1. “Retail prescriptions” cover pharmacy-dispensed medicines and exclude drugs administered in hospitals or physician offices. Projections estimate that by 2033, retail prescription drug market value could reach $776 billion2.
U.S. Drug Market Value Rise: GLP-1 Blockbusters and High-Priced Innovation
Growth in market value may reflect (i) very high utilization of a limited number of therapies, and (ii) higher prices of innovative medicines.
CMS and HHS highlight a rapid uptake in diabetes/obesity drugs: in Medicare Part D, 10 diabetes drugs (including Ozempic, Rybelsus and Mounjaro) accounted for $35.8 billion in 2023, up by 364% from 2019 to 2023 (with Rybelsus, Ozempic and Mounjaro increasing by 2 182%, 1 567% and 1 541%, respectively)3.The market value of diabetes/obesity drugs could reach $102 billion by 2026. This underscores how a limited number of therapies can drive large funding volumes.
Furthermore, while generics account for roughly 9 in 10 prescriptions, they represent only 20% of the prescription market value. ICER reports that the orphan share of U.S. invoice-level market value rose from ~2% in 1992 to ~11% in 2019, and that a further ~16% of value was for non-orphan indications of drugs that also carry orphan designations, illustrating how orphan-linked products account for a sizeable and growing slice of the market4. Price levels are a key driver: in 2017, average launch-year annual price for orphan drugs was ~25× higher than for non-orphan drugs.
Who Pays for U.S. Prescription Drugs?: Market Breakdown by Payer
Retail market value of prescription drugs is primarily financed by insurance (private and public), with a smaller out-of-pocket share. The latest federal accounts show private health insurance as the largest single financing source (40%), with Medicare next (32%), followed by Medicaid (10%); households finance the remainder directly5.
U.S. Drug Market Outlook: CMS Projects Growth, But MFN Pricing and Import Tariffs Add Uncertainty
CMS projects steady growth of the prescription drug market value through the next decade. However, forecast uncertainty has increased following recent federal actions. In April–May 2025, the Administration issued Executive Orders aimed at lower prescription drug prices, followed by pushing manufacturers toward “most-favored-nation” (MFN) pricing. In parallel, tariff policy was updated, including a 15% import tariff announced for certain EU pharmaceutical categories (with exemptions for generics communicated separately). For manufacturers, the combined effects of MFN-style initiatives and evolving trade/tariff measures introduce pricing, contracting, and supply-chain uncertainty, even as utilization and innovation remain strong demand drivers.
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Sources
[1] https://www.cms.gov/files/document/highlights.pdf
[2] https://www.healthsystemtracker.org/chart-collection/how-much-is-health-spending-expected-to-grow
[3] https://oig.hhs.gov/documents/audit/10207/A-05-24-00015.pdf
[4] https://icer.org/wp-content/uploads/2022/04/ICER-White-Paper_The-Next-Generation-of-Rare-Disease-Drug-Policy_040722.pdf
[5] https://www.healthsystemtracker.org/chart-collection/recent-forecasted-trends-prescription-drug-spending/
