By KRISTINA SMITH & PHIYEN NGUYEN

Policymakers and advocates often promote drug price transparency to lower costs and improve equity. While transparency is an important first step toward accountability and informed public budgeting, it does not guarantee affordable prices or fair access to medicines.

Transparency Has Some Benefits

Drug price transparency helps show how and why medicines cost what they do along the supply chain (i.e., from the manufacturer to the pharmacy), which makes it easier to identify where costs can be reduced or better regulated. By making this information public, transparency allows patients, payers, and policymakers to make more informed decisions and encourage manufacturers to prices drugs more fairly. Ultimately, it supports a fairer system where patients can better afford and obtain the treatments they need, improving access to care.

States with Drug Transparency Laws

While federal policy to improve price transparency is lacking, the states have moved to make things clearer for patients and payers. Vermont was the first U.S. state to enact a drug price transparency law in 2016. Since then, many others have followed suit. At least 14 states have passed some version of transparency legislation, though the details and their enforcement of these laws differ widely.

For example, only Vermont and Maine require drug companies or insurers to disclose the actual prices paid after discounts (called the “net price”). Alternately, Oregon and Nevada require drug manufacturers to publicly report their profit to state government agencies. And Connecticut, Louisiana, and Nevada mandate pharmacy benefit managers (PBMs) to report the total rebates they receive, but not the amounts for each specific drug. Despite these efforts, no state has yet achieved full transparency across the entire drug supply chain.

Transparency is Not Enough

Even with clear pricing, Americans still pay about 2.6 times more for prescription drugs than people in other wealthy countries. Early evidence suggests that these laws have done little to curb drug prices. To date, only four states – California, Maine, Minnesota, and Oregon – have published analyses of their own laws. These reports share common concerns: difficulty tracking pricing across the supply chain and uncertainty about whether state agencies have the authority (or the will) to act when data is incomplete or unreliable. 

Most transparency laws fall short on requiring detailed cost or profit data, focusing instead on broad price trends. As a result, this narrow scope makes it difficult to identify the exact drivers of high drug prices. Even when transparency discourages manufacturers from raising prices, these policies do not directly control pricing or define what constitutes an ‘unjustified’ price increase. Manufacturers can simply adjust by setting higher launch prices or implementing smaller, more frequent increases to stay below reporting thresholds. Still, the result is a system where drug costs can vary by as much as $719 for the same 30-day prescription even when prices are publicly listed.

What can also be done?

Creating a consistent national framework could replace the current patchwork of state laws and improve oversight of how drugs are priced. For example, the Drug Price Transparency in Medicaid Act (H.R. 2450) could do just that: it would standardize reporting requirements and reveal how drug prices are set, rebated, and reimbursed. But transparency alone can’t lower costs—it only shows the problem.

To make transparency meaningful, policymakers must address the underlying contracts and incentives that drive high prices.