The story is partially true.
Originally, NASA astronauts, like the Soviet cosmonauts, used pencils. In 1965 NASA ordered 34 mechanical pencils from Houston's Tycam Engineering Manufacturing, Inc. They paid $4,382.50 or $128.89 per pencil. When these prices became public, there was an outcry and NASA scrambled to find something cheaper for the astronauts to use.
Pencils may not have been the best choice anyway. The tips flaked and broke off, drifting in microgravity where they could potentially harm an astronaut or equipment. And pencils are flammable--a quality NASA wanted to avoid in onboard objects after the Apollo 1 fire.
Paul C. Fisher and his company, the Fisher Pen Company, reportedly invested $1 million to create what is now commonly known as the space pen. None of this investment money came from NASA's coffers--the agency only became involved after the pen was dreamed into existence. In 1965 Fisher patented a pen that could write upside-down, in frigid or roasting conditions (down to minus 50 degrees Fahrenheit or up to 400 degrees F), and even underwater or in other liquids. If too hot, though, the ink turned green instead of its normal blue.
That same year, Fisher offered the AG-7 "Anti-Gravity" Space Pen to NASA. Because of the earlier mechanical pencil fiasco, NASA was hesitant. But, after testing the space pen intensively, the agency decided to use it on spaceflights beginning in 1967.
In 1968, NASA ordered 400 of Fisher's antigravity ballpoint pens for the Apollo program. A year later, the Soviet Union ordered 100 pens and 1,000 ink cartridges to use on their Soyuz space missions. Both NASA and the Soviet space agency received the same 40 percent discount for buying their pens in bulk. They both paid $2.39 per pen instead of $3.98.
Since the late 1960s American astronauts and Russian cosmonauts have used Fisher's pens.