Drug pricing reforms aim to address costs, expand access
Prescription drug costs in the U.S. remain a major concern, with spending projected to rise despite recent policy reforms. The current administration and Congress are implementing measures to address prices and improve affordability.
Why it matters
- According to Managed Healthcare Executive, U.S. pharmaceutical spending reached $806 billion in 2024, with 9% to 11% growth expected in 2025.
- Specialty drugs for diabetes, cancer and endocrine disorders drive much of this increase.
- Average annual drug spend per person remains around $1,500, highlighting affordability challenges.
Key policy actions
- Most-Favored-Nation (MFN) pricing: Requires manufacturers to offer the U.S. the lowest prices given to comparable developed countries.
- Medicare negotiations: Caps on insulin and select high-cost drugs aim to reduce out-of-pocket costs for seniors and Medicaid recipients.
- Tariffs on imported branded drugs: A 100% tariff incentivizes domestic production to strengthen supply chains.
- Transparency and pharmacy benefit manager (PBM) reform: Executive actions promote competition among pharmacy benefit managers.
Congressional support
- Legislation such as the Drug Shortage and Urgent-use Medication Act expands access and controls prices.
- Bills focus on:
- Aligning U.S. drug prices with international benchmarks.
- Reforming PBMs for greater transparency.
- Ensuring affordable access through Medicare and Medicaid.
Recent developments
- New pricing program:
- Prices for widely used treatments will drop significantly, with some medications reduced by more than 60%.
- Oral versions of certain drugs are expected to launch at substantially lower monthly costs.
- Discounts will extend to treatments for chronic conditions, including diabetes and migraines.
- Direct purchase platform: A new website launching in early 2026 could allow patients to buy discounted medications directly from manufacturers, bypassing traditional insurance barriers.
The takeaway
Pressure from patients and policymakers remains high as a large portion of Americans report medication costs as unaffordable, further motivating aggressive strategies to lower prices. Simultaneously, pharmaceutical companies have pushed back against some reforms arguing that maintaining profitability is crucial to sustaining innovation. As the marketplace adapts, expect continued debate over how to align cost control with innovation, likely shaping the future of health care access for decades to come.
Learn more about what’s happening in health care in our industry outlook.
