Health Care

Survey Again Suggests Positive Outlook for U.S. Drug Prices

By: Steve Scala, Michael Nedelcovych, Chris LoBianco, Paul Kuhn

Jan. 26, 2026 - 3 minutes

Close up of shelves stocked with various boxed and bottled medications.

What You Need to Know:

Healthcare payors believe brand drug prices will rise by a low-single-digit rate annually over the next three years, similar to the last few years.
Most respondents attribute overall price growth to newer, higher-priced therapies.
Oncology, diabetes/obesity and gene/cell therapy are expected to contribute most to price increases.
The impact of Inflation Reduction Act (IRA) on price is expected to be modest; this could drive a mid-single-digit utilization increase in five years.
Biosimilar penetration expectations are growing. Gross-to-Net (GTN) discounts appear more tempered.
Respondents anticipate 60-100 drugs may be involved in Direct-to-Consumer (DTC) programs in the next three years.

The TD Cowen Insight

Highlights from our 31st Annual Drug Pricing survey, which captured 13% of U.S. drug spend:

U.S. brand drug prices to rise over next three years at low-single-digit annual rate, driven by innovation.
IRA to have modest impact on pricing but now positive impact on utilization.
Biosimilar penetration to grow.
GTN discounts will be tempered.
Obesity drug coverage is likely to improve.

Our Thesis

Issues like the IRA-negotiated drug prices and potential spill-over to commercial markets, pricing deals with President Trump and selling drugs DTC concern investors relative to potential impact on drug prices. In contrast to this fear, we believe U.S. prices will increase as higher-priced new drugs offer benefit to patients. As long as biopharma delivers innovation, we see no change in the upward trend in drug prices.

What Is Proprietary?

We have conducted a survey of buyers of drugs in the U.S. for the past 31 years. During this time, our survey has predicted that drug prices would rise despite multiple reform and pricing initiatives and political party changes. As predicted, drug prices have indeed increased during this span. This year's sample of purchasers, who responded to our survey in the fourth quarter of 2025, anticipate that brand drug acquisition cost per unit will increase by an average of 8% over the next three years (7% by weighted average). This is in line with last year's forecast. Twenty-two percent of respondents attribute a substantial (75%) portion of the anticipated increase to a shift in mix to higher-priced newer therapies; this is up from 11% in 2024 and 15% in 2023. Our survey results are based on responses from 27 Health Maintenance Organizations (HMOs), Pharmacy Benefit Managers (PBMs) and hospitals. Collectively, they purchased approximately US$104 billion of drugs in 2025, or about 13% of total U.S. drug expenditures.

Financial and Industry Model Implications

We view the biopharma sector as fundamentally solid given strength of pipelines, favorable unit dynamics and positive pricing in the U.S. blunting price erosion outside the U.S. This backdrop allows for greater conviction in product forecasts; these products should drive growth for years to come.

What To Watch

IRA is anticipated to have modest impact on drug prices in the next three years. Payors believe out-of-pocket maximums drove an average volume increase of 5% in 2025. In five years, payors expect this component to drive an aggregate average drug volume increase of 5% (about 1% annually). Respondents estimate that price spillover of the 10 drugs with negotiated prices in 2026 will result in a 4% price decrease on commercial channels. Drug manufacturer deals with Trump do not appear to be impacting payor expectations for price changes.

Payors anticipate that 60-100 drugs may have DTC programs in three years. Biosimilar penetration is expected to rise. Payors continue to lack consensus on obesity coverage but overall anticipate improvements in the midterm. Medicare coverage could increase spending on Glucagon-Like Peptide-1 (GLP-1) drugs by 80-95% in 2030.

Subscribing clients can read the full report, 31st Annual Survey: Positive Outlook For Drug Prices – Ahead Of The Curve, on the TD One Portal

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Steve Scala, RPh, CFA

Managing Director, Health Care – Major Pharmaceuticals Research Analyst, TD Cowen

Steve Scala, RPh, CFA
Managing Director, Health Care – Major Pharmaceuticals Research Analyst, TD Cowen

Biography

Steve Scala is a senior research analyst with more than 30 years of experience following the pharmaceutical industry, including large-, mid- and small-cap companies. Prior to joining TD Cowen, Mr. Scala was a pharmacist at Tufts Medical Center in Boston. He received a BS in pharmacy from the University of Connecticut, an MS in pharmacy from Ohio State University, and an MBA from Bentley College. He is a CFA charterholder.

Michael Nedelcovych, Ph.D.

Director of Equity Research, Pharmaceuticals/Major, TD Cowen

Michael Nedelcovych, Ph.D.
Director of Equity Research, Pharmaceuticals/Major, TD Cowen

Biography

Mike Nedelcovych is a Director of Equity Research covering pharmaceuticals. He joined TD Cowen from Johns Hopkins Drug Discovery after co-founding a biotech startup. Prior to that, Michael completed a postdoctoral fellowship in the Department of Neurology at Johns Hopkins University School of Medicine. He received his Ph.D. in Pharmacology from Vanderbilt University and his B.S. in Neuroscience from The College of William & Mary.