A 5% price cut of all reimbursed medicines was enforced at the beginning of 2006 in Finland to control increasing drug costs. OBJECTIVES: To estimate the significance of price development to rising drug costs by describing the development of drug wholesale price indices in Finland in 1980–2005. METHODS: Price indices covering study period (The Helsinki Research Institute for Business Administration [1980–1990], IMS [1991–1994] and Statistics Finland [1995–2005]) were merged into two index clusters (1980=100 and 1990=100). The latter enables more precise classification according to reimbursement categories. Real price indices were produced by adjusting nominal indices with Consumer Price Index (CPI, Statistics Finland) and its sub-index Consumer Price Index for Health Care (CPI-H, Statistics Finland). RESULTS: In 2005, the index (1980=100) for all drugs was 164 (CPI adjusted 63; CPI-H adjusted 32) and for basic refund category 137 (53; 26), respectively. The respective figures in 1990=100 index were: all drugs 105 (82; 58), prescription based 98 (76; 54), reimbursed 92 (72; 51), Basic Refund (‘50%') 94 (73; 52), Lower Special Refund (‘75%') 85 (66; 47) and Higher Special Refund (‘100%') 100 (78; 55). CONCLUSIONS: Nominal drug wholesale prices have increased in Finland, but real prices have constantly decreased. Real prices (CPI-adjusted; CPI-H-adjusted in parenthesis) of all drugs have decreased 37% (68%) since 1980, or 18% (42%) since 1990. For reimbursed drugs the development has been more dramatic; in Basic Refund category real prices have decreased 47% (74%) since 1980, and 27% (48%) since 1990. From that point of view it seems that rising drug costs can not be explained with price development and that grounds for mandatory price cuts are not sustainable.