For many years, the pharmaceutical industry has kept its pricing decisions confidential, rarely offering explanations for price increases or reductions unless required by government action. This lack of transparency has led to growing calls for change, especially as Americans pay significantly higher prices for medications compared to other developed countries.
Healthcare cost transparency has been a policy focus in recent years but faces continued resistance from the industry. In 2019, an executive order mandated that hospitals and insurers provide more transparent pricing information. Another executive order in February 2025 further required that patients have access to clear healthcare cost data and directed federal agencies to improve and enforce these requirements.
At the end of 2025, deals were made between the administration and major pharmaceutical companies aimed at lowering drug prices and investing in U.S.-based manufacturing and research. In exchange, these companies received exemptions from certain tariffs. Despite these agreements, prices increased for hundreds of drugs as 2026 began.
The process behind drug pricing remains complex and largely hidden except within specific industry teams. The methodology relies on clinical and economic data but is seldom shared outside internal discussions with payers. According to a strategic communications leader with nearly two decades in the field: "If insiders can’t access and explain this information, then it’s unsurprising that physicians, pharmacists, policymakers and patients can’t either." The result is a lack of understanding among stakeholders about why drug prices rise—a situation that can erode trust and prompt stronger demands for regulation.
When questioned about their pricing strategies, pharmaceutical companies often cite general factors such as research costs or regulatory fees without explaining how individual drug prices are set. There is increasing pressure for companies to clarify which clinical results justify premium pricing, how cost-effectiveness analyses are conducted relative to alternatives, what role evaluators like CMS or ICER play in reference pricing ranges, and how payer negotiations affect final list prices.
While it is acknowledged that developing new medications requires significant investment—often over $1 billion across more than ten years—protecting details of the pricing process may give the impression that those costs cannot be justified publicly.
Transparency could help repair relationships with stakeholders by making it easier for physicians and patients to understand price changes; this might reduce demands on policymakers to impose strict regulations. As stated: "Guarding pricing methodology creates the perception that costs can’t be defended."
Other industries have faced similar pressures; airlines were required to disclose all-in ticket prices after public demand grew for clearer cost breakdowns at checkout time. Stakeholders now expect businesses across sectors to explain decisions affecting customers’ finances or health outcomes when those choices are made behind closed doors.
Recent political actions signal growing interest in regulating drug costs at a national level—a trend likely leading toward mandatory disclosure if voluntary efforts do not materialize soon. Comparisons have been drawn with medical device manufacturers who publish economic data supporting independent analysis without losing control over their own pricing power; instead, they reportedly gain trust among payers through greater openness.
Industry reports sometimes mention overall trends but often avoid disclosing details on individual product price changes—a practice criticized by some observers as insufficiently transparent.
Ultimately, leadership accountability will determine whether meaningful transparency becomes standard practice in pharmaceuticals. CEOs are encouraged to take proactive steps toward sharing information about how specific medication prices are determined—including value assessments based on clinical endpoints—and communicate this openly through white papers or other public documents.
As noted: "The value of pharma’s work is undeniable, but the industry needs to confront a hard truth: many stakeholders don’t trust it." Early adopters of transparent practices may benefit from improved relations with both regulators and consumers while setting standards others must follow.
