Prescription Drug Prices Drop 3.1% as Credit Claims Draw Scrutiny

A record drop, and a quick victory lap

Federal inflation data are sending a real signal on prescription drug prices this year. The Bureau of Labor Statistics reported that these prices fell 3.1% in the 12 months ending in July. That is the steepest annual decline since 1963. Prices also slipped 0.8% from June to July, the third monthly drop in a row.1 The broader medicinal drugs category, which includes over-the-counter products, fell 2.7% even as overall consumer prices rose 3.4%.16 By one investment research firm's count, the six-month decline was the sharpest on record.15

The White House moved fast to claim the result. By mid-September it was saying that Presidents had long promised cheaper medicines but only Donald Trump had delivered. It pointed to the 60-year record as proof and said the lower prices now extend to every Medicaid program in the country.11 Medicare chief Mehmet Oz put it more bluntly on social media, saying prices fell because Trump kept his promises.23

The administration's case has two parts. One is a set of "most favored nation" (MFN) agreements, which tie some U.S. prices to the lowest prices drugmakers charge in other wealthy countries. The other is TrumpRx, a federal website that points patients to cash prices. The White House says 26 drugmakers, covering 90% of the branded U.S. market, have signed on. It projects more than $600 billion in savings.11 Health-policy reporters and economists have pushed back hard, and STAT's Ed Silverman wrote that the "promises kept" story leaves out most of what matters.1 Looking across the coverage, the skeptics have the stronger argument. The decline is real. The evidence that the White House caused it is thin.

What the index actually measures

The fight over credit depends on a technical point. The BLS prescription drug index does not track what manufacturers charge. It tracks what pharmacies receive when they fill a prescription: the patient's payment plus whatever private insurance or Medicare Part D pays.15 Manufacturer rebates paid after the sale are left out.17 Medicaid is also left out, because it is entirely taxpayer-funded and the index measures consumer prices.23

That last point undercuts the administration's main argument. Much of the MFN program applies to sales to state Medicaid programs, and Medicaid purchases do not show up in the index. One Johns Hopkins health economist said that, for now, TrumpRx is the only place MFN prices could appear in the CPI.23 The numbers there are small. TrumpRx's reported $700 million in savings would be less than 0.2% of the $467 billion Americans spent on prescription drugs in 2024.23

A falling index also does not mean any single patient pays less. Out-of-pocket costs depend on insurance design, formulary tier, deductibles and whether a generic is available.21 KFF polling earlier this year found six in ten adults worried about affording their medications, the highest share since KFF started asking in 2018.21

The likelier explanations

Economists do not fully agree on what caused the drop. Most of them, though, point to forces other than the White House deals. Several credit Medicare price negotiation under the 2022 Inflation Reduction Act (IRA), the law passed under President Joe Biden. Negotiated prices for the first 10 drugs took effect in January, some as much as 79% below list price.17 Brookings economist Richard Frank told The Washington Post that if he had to bet on what mattered most, he would pick the IRA, and he would not put his money on Trump's measures.15 A USC economist said policy credit, if anyone gets it, belongs to the IRA, though he added that market forces explain much of the decline.17

Frank is cautious on this, which is worth noting. Speaking to FactCheck.org, he said the first round of negotiations was a possible but unlikely major driver, because it covered so few drugs. He said he would be surprised if either the MFN talks or the IRA explained much of the drop.23 The White House answered that the negotiated prices took effect in January without moving February's index. The index did fall only about 0.2% in February, then dropped 1.5% in March.23

Two other forces show up in nearly every account. The first is generics. When a brand-name drug loses patent protection, the BLS swaps in the cheaper generic after about six months and records the difference as a price cut. A wave of blockbuster drugs recently lost exclusivity.15 Generics also make up more than 90% of prescriptions, according to a conservative health-policy group that is otherwise sympathetic to the administration.18

The second is GLP-1 weight-loss drugs. Competition between Novo Nordisk and Eli Lilly, cheaper compounded versions, and patients paying cash because insurance won't cover the drugs were all pushing prices down regardless of any White House deal.1523 The administration's agreements with Novo and Lilly did cut cash prices and widened Medicare access. A Medicare pilot began July 1 with a $50 monthly copay. KFF's Cynthia Cox said that pilot may have contributed to July's drop.23 So the most generous reading is that the administration pushed along a price war that was already underway. It did not start one.

Drugmakers kept raising prices

The weakest part of the "promises kept" message is what companies did with list prices. Reuters, citing data from 3 Axis Advisors, reported at the end of 2025 that drugmakers planned to raise prices on at least 350 branded drugs in January, including companies that had just signed MFN deals.10 A later 46brooklyn analysis found price increases on 872 brand-name drugs in the first two weeks of 2026, at a median of 4%. That is the same as the year before. Every one of the 16 companies with deals at the time raised some prices.13

Pfizer, the first company to sign, raised prices on 72 products, including a 15% increase for its COVID vaccine.13 The deals do not require companies to cut or freeze list prices on existing drugs. Their terms are mostly confidential, and the main enforcement tool is a tariff threat that participants have had suspended for three years.5 A White House spokesperson told NPR that list prices are not important.13 That argument has limits. List prices are the starting point for talks with insurers and pharmacy benefit managers, and they shape what patients pay at the counter.13

Some of the biggest list-price cuts actually came from the IRA. Boehringer Ingelheim's more than 40% cut to Jardiance was driven by Medicare negotiation, not its MFN agreement.5

Who the deals reach

The MFN agreements leave most people out. They mainly cover Medicaid and cash purchases, so prices for private insurance and Medicare stay largely the same.6 Roughly 155 million Americans with employer or commercial coverage get no direct benefit.5 When the administration added nine mid-sized companies on Aug. 31, bringing the total to 26, a Harvard health-policy researcher told TIME that the main beneficiary is Medicaid's budget, not patients.4 One law firm's summary put the deals' share of the branded market at about 89%. That is close to the White House's 90% figure but is a narrower measure.8

The savings may not last, either. A July JAMA research letter estimated $8.6 billion a year in Medicaid savings from the first 17 agreements. One of its authors called long-term savings "likely illusory," because drugmakers tend to raise prices abroad or delay launches in lower-priced countries so the comparison prices go up.4 He also pointed to signs in earnings reports that companies see the Medicaid deals as a way to avoid much costlier price cuts in Medicare. If so, the government may have gotten the worse end of the bargain.4

The savings projections are also inconsistent. The White House cited more than $600 billion in September.11 A spokesman quoted by FactCheck.org around the same time said over $500 billion across 10 years.23 Neither figure has been independently confirmed. The Medicaid deals in particular are hard to evaluate, because states already pay some of the lowest drug prices in the country.12

The verdict

Prescription drug prices really did fall at a historic pace, and patients buying GLP-1s with cash have seen real savings. But the claim that the White House delivered on its drug-pricing promise doesn't fit how the price index works. MFN prices mostly flow through Medicaid, which the index doesn't count. TrumpRx's savings are tiny compared with national spending. And the deal-signing companies kept raising list prices in January. The available evidence points instead to generics, a fierce GLP-1 price war and a Biden-era negotiation law the administration dismisses. Working out exactly how much each factor contributed will take time. For now, the administration is taking credit for a decline that its own policies did relatively little to cause.