AXIOS (Courtenay Brown) - Why prescription drug prices are plunging
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…
Despite falling aggregate drug prices, what are the reported financial concerns for American consumers?
According to KFF, six in 10 Americans expressed worry about affording their medications this spring—the largest share since 2018—and four in 10 reported they had not taken medication as prescribed in the past year due to cost.
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How does the government's prescription drug Consumer Price Index (CPI) track pricing?
The government tracks the prices that pharmacies receive from insurers and patients (including Medicare), rather than just what consumers pay out of pocket; however, the Bureau of Labor Statistics stated that manufacturer rebates paid after the transaction are not captured in the index.
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What factors have contributed to the downward pressure on prescription drug prices?
Several factors are contributing to the decline, including:
- Market competition, such as cheaper generics entering the market as blockbuster drugs lose patent protection.
- Heated competition in the market for GLP-1 drugs.
- Deals struck by Eli Lilly and Novo Nordisk with the administration to cut cash prices for blockbuster GLP-1 drugs and expand Medicare access.
- Medicare negotiations established under the Inflation Reduction Act (IRA) for 10 of the program's costliest drugs, which took effect in January with negotiated prices as much as 79% below list prices.
- Trump administration initiatives like TrumpRx, which connects patients with discounted cash prices, and "most-favored-nation" deals aimed at aligning U.S. prices with lower overseas prices.
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How have prescription drug prices performed throughout the current year?
Prices have not risen in any month this year, marking an unusually persistent period of flat or falling drug prices, even as costs for physician and hospital services continue to increase.
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