U.S. Brand-Name Drug Prices Fell in 2025 as the Net Pricing Drug Channel Emerges

It’s time for Drug Channels’ annual examination of U.S. brand-name drug pricing.

For 2025, brand-name drugs’ average list prices grew by only 3.5%, but net prices declined. When manufacturers’ rebates and discounts are factored in, drugs’ average net prices—both before and after inflation—fell. Details and additional commentary below.

As I have been predicting, the gross-to-net bubble is deflating due to the combined impacts of government actions and consumer behavior.

For 2024 and 2025, manufacturers reduced the wholesale acquisition cost (WAC) list prices for more than 20 brand-name drugs. For 2026, manufacturers will cut prices on at least 15 more drugs, which will reduce gross brand-name revenues by $35 to $40 billion. List prices are dropping by –25% to –85%.

The data leave no doubt: the bubble is finally leaking air. We are entering the Net Pricing Drug Channel (#NPDC)—a market environment in which net prices, not list prices, drive access, economics, and strategy.

The NPDC will reward simplicity, punish rebate dependence, and force every channel participant to rethink how money actually moves. Time to get ready.
DATA DISAMBIGUATION

To examine drug pricing, we again rely on data from SSR Health, an independent organization that collects and reports data on pharmaceutical prices. SSR Health is widely regarded as the leading provider of these data. Click here to learn more about SSR Health and its US Brand Rx Net Pricing Tool.

SSR Health’s list and estimated net pricing figures are based on approximately 1,000 brand-name drugs with disclosed U.S. product-level sales from approximately 100 currently or previously publicly traded firms. The products and companies in the SSR Health numbers account for more than 90% of U.S. branded prescription net sales. SSR Health updates these figures quarterly, and its historical figures date from the first quarter of 2007. SSR Health computes sales-weighted averages, so the figures below reflect an appropriate market-level price index. Note that SSR Health has updated some of the market figures based on net price information for products that had not been previously included in its data.

Here’s DCI’s quick refresher on drug pricing terminology:

The manufacturer of a drug establishes the drug’s list (gross) price, called the Wholesale Acquisition Cost (WAC). A manufacturer’s gross revenues equal its revenues from sales at a drug’s WAC list price.

A drug’s net price equals the actual revenues that a manufacturer earns from a drug after rebates, discounts, and other reductions. A drug’s net revenues equal its revenues from sales at the drug’s net price. Drug channel intermediaries—pharmacies, PBMs, wholesalers, and payers—do not have access to the net prices that manufacturers earn.

The major components of gross-to-net price differences for brand-name drugs include:

Rebates, discounts, and fees to commercial payers and plans
Rebates and discounts in Medicare Part D. (Through 2024, manufacturers provided coverage gap discounts, which were replaced in 2025 by the manufacturer discount program.)
Rebates to the Medicaid program
Discounts under the 340B Drug Pricing Program
Manufacturers’ payments to drug channel participants, including administrative and other fees to PBMs as well as fees and discounts to pharmacies, wholesalers, and other purchasers
Patient assistance and copayment support funds

Negotiated and statutory rebates to third-party payers are the largest and most significant components of gross-to-net differences. We quantify the components of gross-to-net differences in Chapter 9 of our 2025 Economic Report on U.S. Pharmacies and Pharmacy Benefit Managers.

Drug Channels Institute coined the term gross-to-net bubble to describe the ever-inflating dollar gap between manufacturers’ gross and their net revenues. We use “bubble” to characterize the speed and size of growth in the total dollar value of manufacturers’ gross-to-net reductions. Our terminology has been embraced by industry participants, the government, academic researchers, and others who cover the industry. For 2024, DCI estimates that the total value of manufacturers’ gross-to-net reductions for all brand-name drugs was $356 billion.

DRUG PRICING REALITY CHECK

The implications of these trends become clear in the long-term data. The chart below summarizes the 12 years of list and net price changes for a broad set of brand-name drugs:

[Click to Enlarge]

The data continue to show significant gaps between list and net price changes:

Average list-price growth remained at its lowest level in at least 10 years—due partly to list-price cuts for some marketed products. From 2010 to 2015, list prices had been increasing by 10% to 15%. Growth has slowed sharply. From 2019 through 2023, average list price increases were about 5%.
Over the past two years, however, average brand-name list prices have been below 4% annually. And based on initial data for 2026 from 46brooklyn, list price growth will be 4.0%. (I suggest you monitor 46brooklyn’s valuable Brand Drug List Price Change Box Score.)

For 2024, the three major manufacturers of widely prescribed insulin products—Eli Lilly, Novo Nordisk, and Sanofi—reduced the WAC list price of many brand-name insulin products by −50% to −80%. We estimate that these products had more than $20 billion in gross sales prior to the price reductions, so they had contributed disproportionately to the gross-to-net bubble.

List price decreases for other widely prescribed products continued in early 2025. Exhibit 247 of our 2025 pharmacy/PBM report highlights 18 brand-name drugs for which manufacturers lowered the list prices of marketed products. On average, list prices for these products were cut in half.

As I discuss further below, list price cuts are broadening and accelerating, which will lead to further deflation of the gross-to-net bubble.

Net prices for brand-name drugs declined, both before and after adjusting for inflation. Through the first three quarters of 2025, nominal net prices decreased by –0.7%. The gross-to-net gap in prices was therefore 4.2% (= +3.5% minus –0.7%).
After adjusting for overall inflation, net prices dropped for the eighth consecutive year. The consumer price index rose by 2.7% during the first three quarters of 2025—the time period shown in the chart above. Consequently, real, inflation-adjusted net prices fell by −3.4%.

Competition reduced net prices, offsetting list price increases. Competition from therapeutic, generic, and biosimilar competitors remains the primary force reducing net brand-name drug prices. On average, rebates and discounts reduce the selling prices of brand-name drugs to half of their list prices.
For instance, Humira now faces more than 20 biosimilar competitors, some of which have list prices that are more than 85% lower. According to SSR Health, the Humira reference product’s net price has dropped by more than 70% over the past three years. The 2025 launch of biosimilars to Stelara (ustekinumab) has also triggered an aggressive price war.

Or consider GLP-1 agonists for obesity, which have been the fastest-growing category of drug spending. SSR estimates that nominal net prices fell by more than 34% during the first three quarters of 2025. Utilization growth has more than overshadowed these price declines, making GLP-1s a primary driver of higher drug spending.

The media continues to relentlessly push a false narrative about list prices. Consider Reuters, which remains fixated on list price increases. Its latest article barely mentions net prices or the multiple top-selling drugs that are reducing list prices.

WELCOME TO THE NET PRICING DRUG CHANNEL

Next week, I’ll post a brief video highlighting the key factors deflating the gross-to-net bubble and creating the emerging Net Pricing Drug Channel (NPDC).

Multiple factors are changing—and will continue to alter—manufacturers’ approaches to brand-name drug pricing, including:

Government: Uncapped Medicaid rebates; Inflation Reduction Act pricing; “Most Favored Nation” pressures

Consumers: High deductibles and coinsurance; Discount cards; Rapid growth of cash-pay pharmacies and DTC options

Ironically, lowering the list price for a highly rebated drug can increase the net price. This occurs because the Medicaid rebate calculation and the 340B ceiling price are both intricately linked to changes in a drug’s list price relative to inflation. That’s one reason nominal net prices didn’t fall further in 2024 and 2025. (See Section 9.1.3. of 2025 pharmacy/PBM report for the math behind this surprising result.)

For instance, Ironwood Pharmaceuticals, which co-developed and co-markets LINZESS with Abbvie, recently announced that the drug’s new lower list price will lead to higher net sales “driven by the elimination of the inflationary component of statutory required rebates across channels.” On January 1, 2026, the list price for LINZESS dropped by –50.3%.

Resetting the relationship between list and net prices will make prescription drugs more affordable for patients, while triggering significant shifts in the business models of pharmacies, wholesalers, PBMs, and manufacturers:

Perhaps the new realities will even convince the drug pricing flat earthers (#DPFE) who remain committed to a false narrative of “skyrocketing” drug prices.

Here at Drug Channels, we anointed SpongeBob SquarePants as the honorary mascot of the bubble. Like Mr. Squarepants, we’re ready for the gross-to-net bubble to deflate.

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