Prescription drug costs

With 82 percent of Americans saying prescription drug costs are “unreasonable,” and 73 percent reporting that the federal government isn’t doing enough to lower prescription drug costs, the popular debate over prescription drugs is not whether drug costs should be reduced but how they should be reduced. One consideration is whether the U.S. federal government should regulate prescription drug prices. [117]

A prescription drug is a medication that may be obtained only with a medical professional’s recommendation and authorization. Since the 19th century (with roots in ancient Rome), the written prescription has begun with the letters “Rx” (often written as an R with a slashed tail), which is short-hand for the Latin word recipe (meaning “take”)—they form the two-letter symbol, frequently seen on prescription pads, pill bottles, and pharmacy signs, now universally synonymous with prescriptions and medical trust. In some U.S. states, not just doctors but physician assistants, nurse practitioners, dentists, pharmacists, clinical psychologists, psychiatrists (who are licensed medical doctors), and other medical professionals are permitted to write prescriptions. Prescription drugs are generally divided into two categories: brand-name drugs and generic drugs (which work in the same way and provide the same clinical benefit as their brand-name counterparts but are routinely cheaper).[2] [3] [121] [122]

Drug prices

In the United States, drug companies (also called pharmaceutical companies, the larger ones frequently dubbed “Big Pharma”) set prescription drug prices, which are largely unregulated by the federal government. Some drug companies will be familiar because their names have been attached to COVID-19 vaccines or other common products—Johnson & Johnson and Pfizer, for example. Others may not be household names but command large portions of the market nonetheless: Swiss companies Roche and Novartis, to name two. [4]

In 2025 the total global pharmaceutical market was valued at almost $2 trillion and was estimated to grow to over $4 trillion by 2034. North America dominates the global market with a market share of nearly 45 percent.[118]

Although there is speculation about how drug companies price drugs—including consideration of competing drugs, medical uniqueness, and the overall market—drug companies are not required to reveal how or why a drug is priced as it is, why or when a drug price may be raised, or why drug costs sometimes exceed research and development (R&D) expenses for the drug. [4] [8]

Patient costs

Most retail prescriptions in the United States are at least partially paid for through private health insurance plans or public programs, such as Medicare (mainly covering people age 65 or older), Medicaid (mainly covering low-income individuals under age 65), and TRICARE (covering military personnel, active-duty and retired). The cost to the patient for these prescriptions is determined by three agents:

• The first is the drug company, which sets a price for a drug it has developed or purchased from another company.
• The second is the pharmacy benefit manager (PBM), who negotiates rebates and savings on behalf of health insurance companies, Medicare Part D drug plans, large employers, and other groups. (These agreements, however, are generally not publicly disclosed, so actual cost savings to patients are unknown.)
• The third is health insurance companies, which determine which drugs will be approved for their customers’ use, how much the insurance company will pay for the drugs, and how much patients will pay.

Patients may not know their out-of-pocket cost for a drug until standing in line at the pharmacy, and, because of disparate insurance coverage, one patient may pay considerably more than another for the same drug. [8] [9] [10]

According to the Rand Corporation, prescription drug prices in the United States were 2.78 times higher on average than prices in 33 other Organisation for Economic Co-operation and Development (OECD) countries—1.72 times higher than prices in Mexico to 10.28 times high than prices in Turkey. Brand-name drugs came in at 4.22 times higher on average. While generic drugs in the U.S. cost slightly less than the global average and accounted for 90 percent of drugs sold, they made up only 8 percent of total drug spending in the United States. Total drug spending in the countries included in the study was estimated to be $988.9 billion, and the U.S. accounted for 62.4 percent of sales and 23.8 percent of volume. [11]

Presidential actions and legislation

While several U.S. presidents have taken action to reduce prescription drug costs, most have focused on allowing federal programs Medicare and Medicaid to negotiate prices. President Trump has taken a different tack. In November 2020, the Trump Administration’s Department of Health and Human Services Centers for Medicare & Medicaid Services introduced the “Most Favored Nation (MFN) Model.” The rule would have tested whether matching Medicare Part B drug costs with international prices could control “unsustainable growth” in prices while not “adversely affecting quality of care for beneficiaries.” The rule was almost immediately challenged and was blocked in federal court in December 2020 while lawsuits were pending (the Biden administration ultimately rescinded the policy in December 2021). [111] [112] [120]

Two legislative efforts to reduce prescription drug prices then came before the U.S. Senate, having passed the House of Representatives in 2021 and 2022. The first was a provision in the Build Back Better Act, passed by the House on November 19, 2021, which died in the Senate in 2022. The second was a bill passed by the House on March 31, 2022, that would have limited the cost of insulin to $35 a month—or 25 percent of the insurance plan’s negotiated price, whichever was lower—but it, too, died in the Senate.[13] [14]

Upon his reelection to office, President Trump took executive action again to try to lower drug prices. On May 12, 2025, he signed an executive order—“Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients”—that supposedly would “bring the prices Americans and taxpayers pay for prescription drugs in line with those paid by similar nations.” The executive order would slash drug prices by at least 50 percent and was described as a “more aggressive” version of Trump’s 2020 Most Favored Nation model that was blocked by a federal court.[113] [114] [115]

On September 30, 2025, drug maker Pfizer announced a deal with the federal government “to ensure Americans receive comparable drug prices to those available in other developed countries and pricing newly launched medicines at parity with other key developed markets.” However, specific details, such as which drugs might have lower prices, were not released. A similar deal with AstraZeneca was announced on October 10. On November 6, a deal with drugmakers Novo Nordisk and Eli Lilly to reduce prices on obesity drugs (including Wegovy and Zepbound) was announced. On December 19, nine more companies announced deals: Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Gilead Sciences, GSK, Merck, Novartis and Sanofi. [116] [52] [40] [126]

However, the first two weeks of 2026 saw an increase in prices for 872 brand-name drugs sold by the companies that made deals with the Trump administration. The price hikes were 4 percent on average, which mirrored the price hike that occurred in January 2025. Despite their deal with the White House, these companies were still hiking prices.[119]

In another attempt to lower the cost of prescription prices, Trump launched on February 5, 2026, TrumpRx.gov, a website that “acts as a landing page to send American patients to direct-sales websites offered by various drugmakers.” The site launched with 43 drugs from five companies—AstraZeneca, Eli Lilly, EMD Serono, Novo Nordisk and Pfizer—that made deals with the Trump administration to lower drug prices. The lowered prices ranged from 50 percent discounts on several drugs to a 93 percent discount on the fertility drug Cetrotide. The site was mainly beneficial to uninsured or under-insured, cash-paying patients or to those with high-deductible insurance policies; for others, it was still cheaper in most cases to acquire their prescriptions through their insurance plans, since their copays were still cheaper than the discounted price of the drugs.[123] [124]

On February 4, 2026, Congress passed a spending package that imposed restrictions on pharmacy benefit managers (PBMs). Mentioned above, PBMs negotiate rebates and savings on behalf of health insurance companies, Medicare Part D drug plans, large employers, and other groups. However, these agreements are generally not publicly disclosed, so actual cost savings to patients are unknown. The new law mandated that PBMs pass all rebates, fees, and discounts from manufacturers to health plans to improve transparency, and that PBMs be paid a flat fee instead of a percentage of a drug’s consumer price, to discourage the promotion of more expensive drugs when lower-priced alternatives were available. [125]

State actions

In 2021, Colorado established the Colorado Prescription Drug Affordability Review Board & Advisory Council. The council is the first of its kind and “has the authority to review prescription drug costs and evaluate their impact on Coloradans through affordability reviews of prescription drugs. The Board may then recommend ways to address those costs and may set an upper payment limit for certain prescription drugs,” according to the council’s website. The pharmaceutical company Amgen has sued Colorado twice over a price cap on Enbrel (which is used to treat rheumatoid arthritis and other autoimmune diseases) that goes into effect on January 1, 2027. A judge threw out the first lawsuit (filed in 2024) that alleged Colorado illegally claimed the drug was unaffordable. The second lawsuit (filed in 2025) alleged that the price cap conflicts with federal law. [43] [42] [41]

Drug imports

Section 804 of the U.S. Federal Food, Drug, and Cosmetic Act (FD&C Act) “allows importation of certain prescription drugs from Canada to: significantly reduce the cost of these drugs to the American consumer, without imposing additional risk to public health and safety.” [1] [2] [47]

On January 5, 2024, the U.S. Food and Drug Administration (FDA) authorized Florida to import prescription drugs from Canada. The authorization was the first in the country but just the first step in the importation of prescription drugs to Florida. Canada has restrictions in place to prevent the export of drugs if doing so “will … cause or exacerbate a drug shortage in Canada.” The population of Florida is roughly half that of Canada, and Canada has had shortages of drugs, from cancer medications to weight-loss and diabetes medications, making export unlikely, according to experts. As of February 19, 2026, no Canadian drugs had yet been imported to Florida. [44] [45] [46] [7]