The typical annual price for a newly approved prescription drug has surpassed $250,000, a new study shows, reflecting the rising medication costs employers, consumers and taxpayers face.
Harvard Medical School researchers found median prices charged by drugmakers climbed more than sixfold in nearly two decades, from about $39,000 in 2008 to more than $250,000 in 2025. The steady rise in new drug list prices amounts to an annual increase of about 16%, according to the Sept. 30 study published in the peer-reviewed journal JAMA.
“It’s quite shocking that the average new drug coming out today costs over a quarter million dollars per year,” said Dr. Benjamin Rome, a Harvard Medical School professor and the study’s lead author.
For some diseases, such as cancer, prices can run much higher. The recently approved pancreatic cancer drug Rasonque launched this year at about $480,000 per year. It’s one of several new cancer drugs since 2024 with price tags exceeding $400,000, according to a report from the Institute for Clinical and Economic Review.
“The cancer drug prices are a lot higher than what we expected for prices 10 years ago,” Rome said. “This really reflects a problem we haven’t gotten under control yet.”
What Drug List Prices Mean for Patients
These prices typically don’t represent what consumers pay at a pharmacy or through mail order. List prices are what drug companies charge before rebates or insurance discounts. Insurance plans often require people to pay part of the cost through copayments, deductibles and coinsurance.
Focusing on list prices gives an “incomplete and often misleading picture of what patients and the health care system actually pay,” said Chanse Jones, a spokesperson for PhRMA, a drug industry group.
Jones added that new drugs often target “serious, complex and rare diseases where there are few or no treatment options,” and the negotiated price is often far lower than the list price.
Still, drug pricing watchdogs who weren’t involved in the study said six-figure prices for new drugs show the need to pressure pharmaceutical companies to lower prices.
“This is exactly why we need to be negotiating on behalf of patients and taxpayers,” said Merith Basey, CEO of Patients For Affordable Drugs, a patient advocacy group. “This is clearly unsustainable because we don’t have unlimited resources to pay these astronomical prices.”
Did Medicare’s Drug Price Law Slow Launch Prices?
The JAMA study found annual price hikes neither slowed nor accelerated after the Inflation Reduction Act, a 2022 climate and health care law with several drug-pricing provisions. The law empowered Medicare for the first time to negotiate drug prices and penalized drugmakers that raised prices faster than inflation.
Some analysts predicted drugmakers would raise launch prices after the law took effect to avoid the inflation penalty, which is designed to slow price increases after a drug reaches the market. But the study concluded the law had little impact on the trajectory of prices.
One reason is that the law limited the number of drugs Medicare could negotiate each year. Medicare enrollees began seeing lower prices in January 2026 for the first 10 drugs prescribed to treat cancer, heart disease, autoimmune conditions and diabetes.
Medicare can negotiate prices only after drugs have been on the market for seven years without a competing generic version. A separate category of drugs, called biologics, must be on the market for 11 years before they can be subject to negotiation.
While President Donald Trump’s health appointees have continued the Medicare negotiations begun under the Biden administration, Trump has also pursued other drug-price strategies.
Trump’s health officials have negotiated voluntary “most favored nation” deals with pharmaceutical companies that seek to lower Medicaid drug prices to levels paid in other countries. The administration finalized a rule on Sept. 30 requiring drugmakers to cut Medicare prices for medicines administered by doctors and hospitals. Companies that negotiated most-favored-nation deals are exempt from the new program, called the Global Benchmark for Efficient Drug Pricing, which will apply to just four companies.
The U.S. Department of Health and Human Services estimated the finalized pilot program will save $440 million over seven years, far less than the nearly $12 billion in savings projected in a proposed rule.
Why New Drug Prices Keep Rising
The Harvard researchers accounted for how medicines developed with emerging technologies, such as gene therapy, can contribute to higher prices. More than two dozen gene therapies have been approved since 2020, and some can extend lives. The most expensive gene therapy, Lenmeldy, a one-time infusion prescribed for the life-shortening disease metachromatic leukodystrophy, launched in 2024 with a list price of $4.25 million.
After adjusting for the impact of these higher-priced modern drugs, researchers said drugmakers still raised prices about 8% per year.
Drug companies get an exclusive window to sell medicines at prices they choose before generic competitors can launch less-expensive alternatives.
Despite high list prices, taxpayer-funded and private health insurance companies face pressure to pay for medicines doctors prescribe and patients need.
“Maybe we’re reaching a breaking point where something has to be done,” Rome said. “That’s going to require policymakers to step in. Clearly, the market is not solving this.”
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