Why prescription drug prices are plunging
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The United States is experiencing its steepest annual decline in prescription drug prices in more than six decades, with prices down 3.1% year-over-year. The drop reflects a combination of government negotiations, market competition, and generic drug entries, though experts debate which factors deserve primary credit for the reversal.
Why prescription drug prices are plunging
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4 hours ago - Business
Why prescription drug prices are plunging
* Courtenay Brown
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*Data: Bureau of Labor Statistics; Chart: Courtenay Brown/Axios*
America is experiencing its biggest prescription drug price deflation in generations.
**Why it matters:** By one important measure, there is a striking reversal underway for one of health care's most stubbornly expensive necessities amid a major Washington push to lower drug costs.
**By the numbers:** Prescription drug prices fell 0.8% in July and are down 3.1% from a year ago — the steepest annual decline in more than six decades, according to the recent Consumer Price Index.
* Prices haven't risen in any month this year, an unusually persistent stretch of flat or falling drug prices.
* The downward trend comes as costs for hospital and physician services continue to rise.
**The intrigue:** Trump administration officials are taking a victory lap for the price drop, although TrumpRx — the administration's website connecting patients with discounted cash prices for certain drugs — likely only accounts for part of the decline.
* Eli Lilly and Novo Nordisk also struck deals with the administration that cut cash prices for blockbuster GLP-1 drugs and expanded Medicare access.
* Those cuts may have added to broader downward pressure on drug prices, though other forces were already at work.
**Another potential factor:** Medicare negotiations established under the Inflation Reduction Act took effect in January for 10 of the program's costliest drugs, with negotiated prices as much as 79% below their list prices.
**Zoom in:** Changes in what Medicare pays pharmacies can show up in the prescription drug CPI.
* The government tracks the prices that pharmacies receive from patients and insurers, including Medicare, not just what consumers pay out of pocket.
* Manufacturer rebates paid after the transaction are not captured in the index, the Bureau of Labor Statistics told Axios.
**What they're saying:** Geoffrey Joyce, a USC health economist, said that TrumpRx makes discounts easier to find but often points consumers to prices that already exist.
* "If you were going to give policy credit, you'd have to say the IRA," Joyce said. Still, he added, much of the decline is being driven by market forces.
**The big picture:** As blockbuster drugs lose patent protection, cheaper generics enter the market, a shift the government's inflation gauge is designed to capture.
* Heated competition in the market for GLP-1 drugs is pushing down cash-pay prices.
**The other side:** White House spokesperson Kush Desai called attributing the decline to the IRA "idiotic and unfounded," arguing that its negotiated prices failed to deliver meaningful savings beyond existing insurer discounts.
* Desai pointed instead to Trump's most-favored-nation deals, aimed at aligning U.S. drug prices with lower prices overseas, and discounts available through TrumpRx.
**What we're watching:** Falling prices in the aggregate do not necessarily translate into relief for consumers, given the complexity of drug pricing and payments.
* Six in 10 Americans this spring said they were worried about affording their medications, according to KFF — the largest share since the group began tracking the question in 2018.
* Four in 10 said that in the past year they hadn't taken medication as prescribed because of cost.
* "People don't care about what the true cost of the drug is," Joyce said. "They just say, 'What's my copay?' or 'What's my cost sharing at the pharmacy counter?'"
*Caitlin Owens and Adriel Bettelheim contributed reporting.*
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4 hours ago - Business
Why prescription drug prices are plunging
* Courtenay Brown
*
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see more of our stories on Google.
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*Data: Bureau of Labor Statistics; Chart: Courtenay Brown/Axios*
America is experiencing its biggest prescription drug price deflation in generations.
**Why it matters:** By one important measure, there is a striking reversal underway for one of health care's most stubbornly expensive necessities amid a major Washington push to lower drug costs.
**By the numbers:** Prescription drug prices fell 0.8% in July and are down 3.1% from a year ago — the steepest annual decline in more than six decades, according to the recent Consumer Price Index.
* Prices haven't risen in any month this year, an unusually persistent stretch of flat or falling drug prices.
* The downward trend comes as costs for hospital and physician services continue to rise.
**The intrigue:** Trump administration officials are taking a victory lap for the price drop, although TrumpRx — the administration's website connecting patients with discounted cash prices for certain drugs — likely only accounts for part of the decline.
* Eli Lilly and Novo Nordisk also struck deals with the administration that cut cash prices for blockbuster GLP-1 drugs and expanded Medicare access.
* Those cuts may have added to broader downward pressure on drug prices, though other forces were already at work.
**Another potential factor:** Medicare negotiations established under the Inflation Reduction Act took effect in January for 10 of the program's costliest drugs, with negotiated prices as much as 79% below their list prices.
**Zoom in:** Changes in what Medicare pays pharmacies can show up in the prescription drug CPI.
* The government tracks the prices that pharmacies receive from patients and insurers, including Medicare, not just what consumers pay out of pocket.
* Manufacturer rebates paid after the transaction are not captured in the index, the Bureau of Labor Statistics told Axios.
**What they're saying:** Geoffrey Joyce, a USC health economist, said that TrumpRx makes discounts easier to find but often points consumers to prices that already exist.
* "If you were going to give policy credit, you'd have to say the IRA," Joyce said. Still, he added, much of the decline is being driven by market forces.
**The big picture:** As blockbuster drugs lose patent protection, cheaper generics enter the market, a shift the government's inflation gauge is designed to capture.
* Heated competition in the market for GLP-1 drugs is pushing down cash-pay prices.
**The other side:** White House spokesperson Kush Desai called attributing the decline to the IRA "idiotic and unfounded," arguing that its negotiated prices failed to deliver meaningful savings beyond existing insurer discounts.
* Desai pointed instead to Trump's most-favored-nation deals, aimed at aligning U.S. drug prices with lower prices overseas, and discounts available through TrumpRx.
**What we're watching:** Falling prices in the aggregate do not necessarily translate into relief for consumers, given the complexity of drug pricing and payments.
* Six in 10 Americans this spring said they were worried about affording their medications, according to KFF — the largest share since the group began tracking the question in 2018.
* Four in 10 said that in the past year they hadn't taken medication as prescribed because of cost.
* "People don't care about what the true cost of the drug is," Joyce said. "They just say, 'What's my copay?' or 'What's my cost sharing at the pharmacy counter?'"
*Caitlin Owens and Adriel Bettelheim contributed reporting.*
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