It’s outrageous how much we pay for brand-name drugs in the U.S. An EpiPen is $600 here and just $67 in the U.K. On Monday, the administration dropped an executive order to tackle drug costs.
This issue is wildly confusing (sometimes I think that’s on purpose), but that doesn’t make it less important—drug prices shape the lives of millions of Americans.
So, I partnered with Dr. Aaron S. Kesselheim to answer your top 10 questions I received this week on the topic:
1. Didn’t Biden do something like this? Is Trump reversing it?
Drug prices have become a bipartisan issue, not because of political alignment, but because Americans are fed up with how much they’re paying for medications and the skyrocketing profits pharmaceutical companies are getting.
So, yes, Biden did something. Trump is trying to do something else.
Biden passed the Inflation Reduction Act (IRA), which, for the first time, allowed Medicare to negotiate the price of a small number of top-selling drugs each year. The IRA also capped the amount an older adult spends on drugs (through Medicare Part D) at $2,000/year. (Before this, some Medicare patients paid tens of thousands of dollars on medicines.)
This week, Trump asked pharmaceutical companies to lower prices, but there is no enforcement mechanism. So some pharmaceutical stock prices actually increased on the day of his announcement. Real change requires either changing laws or standing up to powerful lobbying industries.
2. Why are drug prices in the U.S. so much higher than in other countries?
Because we let them be.
In the U.S.:
Drug companies set launch prices and increase them freely.
Patents block competition for 12–14 years on average.
Although the government doesn’t negotiate drug prices, individual insurers can, but various laws limit their power. For example, Medicare must cover at least 2 drugs per therapeutic class and all FDA-approved drugs in 6 “protected classes,” including cancer, which makes negotiating a fair price for those drugs more challenging.
By contrast, after a drug is approved in countries like Canada or the U.K., their governments negotiate prices directly with drug companies. If a fair price isn’t agreed on, the drug isn’t covered—and in countries outside the U.S., if a drug isn’t covered, it usually isn’t used. Other countries also have laws to prevent subsequent unnecessary price increases.
3. How do high drug prices affect population health?
When medications are too expensive, people skip doses, delay care, or go without it entirely, which leads to more complications, more hospital visits, and preventable deaths.
1 in 3 Americans say they don’t take their medication because of high costs.
1.1 million Medicare patients could die over the next 10 years (that’s 112,000 per year) because they can’t afford needed medications.
The prices are increasing fast:
Between 2022 and 2023, prices for nearly 2,000 drugs increased faster than the rate of general inflation, with an average price hike of 15.2%.
In 2008, the median launch price of a new drug was $2,115 for a year of treatment; in 2023, it was about $300,000 per year.
4. Who’s really to blame—pharma or PBMs?
Both—and they point fingers at each other to avoid accountability.
Pharma sets a drug’s list price, often sky-high. They claim this is to recoup research and development costs. While drug development is expensive and risky, much early-stage research is taxpayer-funded, and large drug companies only spend about 10-20% of their revenue on research.
Then you have pharmacy benefit managers (PBMs). These are middlemen that work with insurance companies to negotiate prices with drugmakers. However, they don’t negotiate lower prices; they negotiate rebates off pharma’s price (and can take a share of the rebate as revenue). This leaves prices high and incentivizes drug manufacturers to raise them even higher, hurting patients.
The system is designed for everyone to profit—leaving patients exposed to extremely high prices.
5. Why do different insurance plans cover different drugs—and charge different prices?
Because behind-the-scenes deals shape everything.
Each health plan builds a formulary—a list of covered drugs—with different “tiers.” As a result, one plan might put a medication on a low tier with a $5 copay, another might not have reached a deal with the drug company and so puts the drug on a high tier with an $85 copay, another might require a prior authorization form (paperwork that the doctor fills out to prove the patient needs the drug) to cover it, and another might not cover it at all.
It’s confusing and wildly inconsistent.
6. What policies actually lower drug prices—and are they politically viable?
Here are some solutions that have worked (or could work if we had the guts to push them through):
Government drug price negotiation: Congress started this in 2022 with the IRA. However, it only applies to a small number of top-selling drugs, does not kick in until a waiting period of 9-13 years passes for each drug, and only applies to Medicare. Much more can be done.
Capping out-of-pocket costs: IRA capped total out-of-pocket costs at $2,000 per year for Medicare Part D patients, and they now pay no more than $35/month for insulin and have no copay for certain vaccines. Lowering the cap more or expanding this protection to all Americans could make a big difference.
Drug patent reform: Brand-name manufacturers get numerous patents on their drugs lasting 20 years. Reforming how patents are issued or enforced could allow for the more timely introduction of generic drugs that provide competition and lower prices.
PBM reform: Congress had a bipartisan deal on PBM reform in 2024, but it did not pass because the newest executive branch did not support it. The bill would have increased transparency around PBMs, regulate how PBMs work in Medicaid, and “delinked” PBM compensation from list prices.
Here are two examples:
GLP-1s (like Ozempic or Wegovy) are expensive not because they’re new or uniquely complex to manufacture, but because of how the system is designed. GLP-1s were discovered decades ago with government funding and originally approved for diabetes. When they were found effective for weight loss, manufacturers launched new versions with the same ingredient but different branding and delivery devices—protected by fresh patents to block generics. They were selected for Medicare price negotiation this year, but changes won’t happen until 2027.
Insulin follows a similar pattern. In recent decades, manufacturers kept prices high by releasing newer versions with marginal improvements, all protected by many patents. Meanwhile, PBMs negotiated rebates based on inflated list prices, pocketing a portion and leaving patients on the hook. In 2020, the FDA altered how it regulated insulin, allowing direct competition in the form of biosimilars. As a result, prices for insulin have fallen, and federal and state caps (like Medicare’s $35/month insulin limit) have helped patients.
There are places Congress should fight, but lobbyists spend millions to block initiatives. Public pressure is the only way to keep progress moving.
7. Why are generics cheaper—and are they just as good?
Yes—they’re just as good.
After all patents expire, other manufacturers can produce their own versions called generics (or biosimilars). Generics are cheaper because they require less up-front costs to develop and are automatically substituted at pharmacies for brand-name drugs (which means way less marketing costs). That direct competition quickly drives down prices.
The FDA requires generics to have the same active ingredients, strength, and dosage, and to be bioequivalent to the brand-name version. They’re not lower quality—they’re cheaper because they are no longer under exclusive control.
8. How do innovation and affordability balance out?
It’s a false narrative that fairly-priced drugs = less innovation. A lot of drug discovery is already publicly funded (mostly through NIH, which is why recent cuts to that agency are so devastating). Pharma companies often build on this research and finish development—then charge U.S. patients whatever they want. While drug development is expensive and risky, large drug companies only spend about 10-20% of their revenue on research.
Drug price negotiation can reward meaningful innovation and ensure reasonable access. A miracle drug doesn’t save lives if people can’t afford it.
9. What about tariffs on drugs—will they help or hurt?
They’ll likely hurt.
Many medications (or their ingredients) are made overseas. If tariffs are on imported drugs or raw materials, manufacturers could pass the added cost on to you. Prices go up, not down—particularly for generic drugs, which are sold at prices close to the cost of production and make up 90% of drugs prescribed to U.S. patients.
Tariffs could also cause supply chain issues—like delays or shortages of common meds.
10. Would lowering drug prices reduce the burden of prior authorization on healthcare teams?
Maybe—but not automatically.
When drugs go generic, prior authorization rules often evaporate. So if brand-name drug prices were more reasonable, insurers might loosen prior authorization requirements. But cost is only part of it—prior authorization is also tied to rebate deals and formulary preferences.
So yes, lower prices could reduce prior authorization, but we’d still need broader reforms for it to go away entirely. That means simplifying coverage rules and demanding systems that work for patients.
Bottom line
Drug prices are tangled up between private interests and Congress. Untangling this mess is possible, but it needs a loud call from Americans.
Love, YLE and ASK
Aaron S. Kesselheim is a primary care physician, lawyer, and professor of medicine at Harvard with expertise in pharmacoepidemiology and pharmacoeconomics.
Your Local Epidemiologist (YLE) is founded and operated by Dr. Katelyn Jetelina, MPH PhD—an epidemiologist, wife, and mom of two little girls. YLE is a public health newsletter that reaches over 375,000 people in more than 132 countries, with one goal: to translate the ever-evolving public health science so that people are well-equipped to make evidence-based decisions. This newsletter is free to everyone, thanks to the generous support of fellow YLE community members. To support the effort, subscribe or upgrade below:
Great discussion on a topic that is frustrating and confusing to physicians and patients alike. I often have wondered, as a primary care physician, the number of premature death this history of unabated capitalism has caused.
I am a retired RPh. Drug pricing is certainly not something one individual or politician can wave a magic wand and fix. Every entity in the price debate will make a profit except the last and I believe most important link in the drug delivery chain, the pharmacy. Pharmacy margins are low, and some drugs are actually negatively reimbursed. I'll say that again, there are medications that the insurance (PBM) pays the pharmacy less than the acquisition cost. The profession is making a concerted effort to bring about PBM reform to stay alive.
I have additional question: Is it possible that when other countries negotiate prices the US or other countries without the same price negotiation end up paying more? A unintended consequences of price negotiation.
I have often wondered if our amazing scientists and researchers will discover "cures" for diseases but as a society will not be able to afford the treatment.