On drug pricing, the President’s numbers are still off

Reviewed by James Ives, M.Psych. (Editor)Feb 5 2020

During the 2020 State of the Union address, President Donald Trump zeroed in on prescription drug prices, arguing that his administration is "taking on the big pharmaceutical companies."

Among the evidence for that claim: a talking point the administration has been using since last April.

"I was pleased to announce last year that, for the first time in 51 years, the cost of prescription drugs actually went down," Trump said.

We've examined this claim twice before, rating it Mostly False. But prescription drug prices are a major voter concern. So we wanted to take another look, in case things had changed.

Experts told us the data remains essentially unchanged. Drug prices are still not going down.

The old talking point

Last spring, Trump's team pulled this claim from two sources: a 2018 report from the president's Council of Economic Advisers and data comparing the January 2019 Consumer Price Index for drugs to that of January 2018. The CPI data suggested a decline in drug prices.

But when we spoke to experts, they quickly debunked this position. For one thing, CPI data is imperfect — it shows list prices, rather than what consumers pay at the pharmacy counter. For another, it covers only drugs sold through retail, which accounts for about three-quarters of all prescriptions. That misses high-priced specialty drugs that are sold only through the mail.

Plus, other metrics showed that drug prices had, in fact, gone up, although by very little. Last April, for instance, the same CPI data indicated an increase — between April 2018 and April 2019, drug prices had increased by 0.3%. Data from the Kaiser Family Foundation also suggested an increase in total spending on drug prices that year, even if growth had slowed. (KHN is an editorially independent program of the foundation.)

What's changed?

Today, prices aren't going up as fast as they were before, said Stacie Dusetzina, an associate professor at Vanderbilt University who studies drug pricing. But they're still going up.

"That probably doesn't provide the average person with much relief," she said.

Meanwhile, there's the question of individual list price increases. (List prices are defined as what's charged before rebates — an amount few people pay but that dictates negotiations.) The CPI data paints with a broad brush, drug pricing analysts said, obscuring just how many drugs have seen and continue to see their prices go up.

In 2019, 4,311 prescription drugs experienced a price hike, with the average increase hovering around 21%, according to data compiled by Rx Savings Solutions, a consulting group. Meanwhile, 619 drugs had price dips.

And already in 2020, 2,519 drugs have increased prices. The average hike so far this year is 6.9%. Meanwhile, the prices of 70 drugs have dropped. Typically, branded drugs increase their prices early in the year, and generics do so later, said Michael Rea, the CEO of Rx Savings Solutions. When generics post their price increases, the 2020 average price hike will likely go up.

"As a broad brushstroke, the story remains the same. Drug prices are going up, not down," Rea said.

Our ruling

President Trump said that in 2018, "for the first time in 51 years, the cost of prescription drugs went down."

Nothing has changed since our previous rulings on this statement. And the continued drug pricing trend suggests that prices may be stabilizing, but they are not coming down. And consumers are not experiencing that relief.

We rate this claim Mostly False.