US drug prices see record fall, but experts say causes are mixed
US prescription drug prices fell 3.1% year-over-year, the sharpest drop since 1963. The White House claims credit, but experts cite multiple factors.
New federal data shows US prescription drug prices fell 0.8% in July and are down 3.1% from a year ago — the steepest annual decline since 1963. The White House attributes the drop to President Donald Trump's "most favored nation" agreements with pharmaceutical companies and the TrumpRx website, saying these initiatives are delivering relief to American families.
However, drug pricing experts say the real picture is more complex. They point to several other factors that may be more significant contributors to the latest consumer price index figures.
A key factor is the 2022 Inflation Reduction Act, signed by former President Joe Biden, which for the first time allowed Medicare to negotiate drug prices with manufacturers. New prices for the first ten negotiated drugs took effect in January, and experts say this likely impacted aggregate prices. The Trump administration has continued these negotiations as required by law.
Market competition is also playing a role. Generic and biosimilar products entering the market are driving down costs of expensive brand-name drugs. For instance, biosimilars now compete with Humira, and competition has reduced prices for Stelara, a biologic for chronic inflammatory conditions.
A new Trump policy lowering GLP-1 weight loss drug prices for certain Medicare enrollees took effect in July, so only its first month is reflected in the data.
Experts note the impact of the "most favored nation" deals is unclear, as contracts have not been made public and the models have not yet been implemented. One researcher said the change is likely more directly related to the Inflation Reduction Act's policies than current initiatives.
TrumpRx has been praised for increasing price transparency, but it's uncertain how many Americans use it. The White House claims $700 million in savings, a figure Senator Elizabeth Warren has questioned, noting the site doesn't store patient information.
Experts also warn that the price index measures what pharmacies are paid, not what consumers directly pay. Many patients may not see savings in their budgets, and some still rely on expensive drugs without cheaper alternatives. Higher health spending and policy changes are also leading to increased premiums and out-of-pocket costs for many Americans.