Why drug prices will keep rising through Trump’s second term

The drug price hikes that are helping drive the health affordability crisis will continue for the rest of President Trump's term, key industry stakeholders are now predicting — despite his deals with drugmakers and Medicare negotiating lower prices.

The big picture: Insurers, drug supply middlemen and hospitals who represent 13% of all pharmaceutical purchases predict single-digit price increases for branded drugs over the next three years, according to a new survey by TD Cowen.

• The increase will be largely driven by pricey new medications, such as drugs for cancer, diabetes and obesity, as well as cell and gene therapies, the purchasers said.
• Drugmakers are already set to raise prices this year on at least 350 medications, including common vaccines and cancer treatments.

State of play: Democrat and Republican policymakers have prioritized lowering drug prices in recent years in response to mounting public concern over health costs.

• Congress during the Biden administration passed the Inflation Reduction Act, allowing Medicare to negotiate lower prices for select drugs.
• Trump has made direct deals with drugmakers for decreased U.S. prices on certain products.

Yes, but: TD Cowen's latest annual drug purchaser survey shows these policy interventions aren't driving prices down, at least in the near term.

• Insurers, pharmacy benefit managers and other payers said they expect their cost of acquiring a drug to increase by 8%, on average, over the next three years. They gave the same figure when surveyed in 2024, 2023 and 2022.
• Prices for generic drugs are predicted to increase by 2% over the same period.
• "As long as biopharma delivers innovation, we see no change in the upward trend in drug prices," TD Cowen wrote in its analysis.

By the numbers: 44% of purchasers surveyed expect Medicare drug negotiations to have a modest impact on cost, and another 30% said they don't think they will have any impact.

• But 74% said they think drug usage will increase over the next five years due to the policy changes and the IRA's out-of-pocket cost protections for seniors.

Reality check: Patients aren't necessarily going to see an out-of-pocket increase as drug acquisition prices rise, due to rebates and other discounts.

• But payers often pass increased costs along to patients, including by raising monthly premiums.
• Net drug prices increased one-tenth of a percent in 2024 after accounting for rebates and discounts, per an IQVIA report published in April.

What they're saying: Patients "bear an unfair burden as out-of-pocket costs have risen faster than the net prices paid by PBMs and insurers," PhRMA spokesperson Chanse Jones said. "At the same time, innovation ... continues to skyrocket."

• Advocacy group Patients for Affordable Drugs said in response to the survey results that the IRA's reforms are working for seniors.
• "[T]hat's exactly why expanding and protecting the law matters," Alyson Bancroft, director of policy, legislation and alliances, told Axios in an email.
• Health and Human Services communications director Andrew Nixon told Axios the agency doesn't weigh in on third-party analyses, but said HHS continues to advance policies to lower drug costs so patients can afford treatments.

What we're watching: Purchasers expect coverage of obesity drugs to grow over the next three years.

• Almost 30% of respondents said they currently have very limited coverage of GLP-1s for obesity, but nearly 20% said they expect to offer complete coverage for a finite amount of time within three years.
• Medications for diabetes, obesity and rheumatological conditions were cited as likely to have the greatest decrease in price over the next three years. That's due to coming patent expirations and increased competition among advanced products, TD Cowen noted.

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