Prescription Drug Prices Are Falling

prescription drug prices are falling

Are Prescription Drug Prices Really Falling?

In March, the U.S. government announced that prescription drug prices went down by 1% in February, the biggest decline in a single month. According to, drug costs are falling for the first time in almost 50 years.

Too good to be true? Maybe.

In March 2019, the U.S. government announced that prescription drug prices went down 1% in February, noting that this was the largest decline in a month’s time ever.

According to the Kaiser Family Foundation, total spending on prescription drugs has actually been on the rise for the past several years. In 2018, spending continued to grow, but at a slower pace. Experts say Americans actually aren’t spending less on drugs.

While the Administration pointed to the Consumer Price Index (CPI) to support the case it made, there are other factors involved that were not taken into account. For one thing, CPI data only includes drugs sold through retail; expensive specialty drugs sold by mail order are not figured in.

The CPI data also doesn’t take rebates into account, whether or not drug manufacturers who lowered their prices have also changed rebate costs. Without looking at these and other indicators, it’s hard to nail down how much we’re really paying for prescription drugs.

Feeling the Pressure

Right now, pharmaceutical companies are feeling pressure from two segments in particular:

  • Public outcry
  • Legislation

Pricing is a complicated issue, with a variety of factors, economic forces and politics influencing pricing decisions.

Why Are Prescription Drug Prices So Expensive?

So why do we pay so much for prescription drugs? As you might expect, it’s complicated. But some of the major factors include the following:

  • Drug prices are higher in the U.S. than in the rest of the world. People pay less elsewhere because their pricing is set by panels or commissions, so the burden of research and development costs falls on American consumers.
  • With Medicare Part B rules now in place, physicians are incentivized to prescribe costlier drugs in order to get larger reimbursements.
  • Medicare Part B costs can’t be negotiated at this time.
  • Many generics don’t make it to market, so brands continue to charge more.
  • Big brand drug companies can pay off generic drug companies to hold back on the release of less expensive medications.

Here’s What’s in the Works to Keep Prices Lower

We know there’s a problem. How are we trying to fix it? Legislative actions. As it turns out high pharma cost is a bipartisan issue.

The International Pricing Index (IPI) – This model is under consideration. It would change the Medicare Part B reimbursement policy to put pricing more in line with what other countries are paying for drugs by incentivizing physicians to prescribe more drugs that are effective but less expensive.

The Preserve Access to Affordable Generics Act – This legislation would prevent big drug companies from paying off generic pharmaceutical companies to delay releasing generics on the market.

Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act – Companies that make biosimilar drugs (biologic products that are almost identical to a big name-brand and approved to come on the market when the original product’s patent expires) and generics would be allowed access to reference products. This is meant to streamline the drug development process, which would in turn bring down prices.

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