Prescription drug prices rose for many drugs this year, but on average the increases were not as steep as in past years.
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According to the report, pharmaceutical companies increased the list prices of 575 well-known brand drugs in the first two days of the new year. Drug price research company 46 Brooklyn. Among other things, prices for drugs to treat diabetes, HIV, and cancer rose.
For years, 10% annual price increases were pretty common, but they have started to decline in recent years. Median price increase so far this year is just 4% Antonio Ciaccia, CEO of 46 Brooklyn.
“It’s still early, but if these numbers hold through the year, the median price increase will be the lowest in more than a decade,” Ciaccia said.
Branded drug prices typically increase in January, but companies can raise prices throughout the year. There could be more later this month, he says.
He provided NPR with data on the increases, explaining that each row in the spreadsheet tells a unique story about how the different layers of the health care system, government regulations, and drug markets interact.
“The list price of a drug creates a powerful signal about what is happening in the market and what incentives are driving certain behaviors, not just by drug companies but by all layers of the drug supply chain.” Ciaccia says.
List price is like the sticker price of a new car and is your starting point. Similar to car manufacturer incentives, there are discounts and different types of rebates that affect the amount you actually pay. Here are the takeaways from this year’s price movements:
some big names came up
Type 2 diabetes drug Ozempic and COVID-19 drug Paxlovid each saw price increases of about 3%, according to 46Brooklyn, which used Elsevier wholesale acquisition cost data in its analysis.
NPR reached out to the drug maker and asked why it raised these prices. Neither company went into detail about the specifics behind the price increases, but spoke generally about price increases across products.
Novo Nordisk, which makes Ozempic, said it had increased prices for some drugs, citing factors such as changes in the healthcare system and inflation. In particular, it did not increase the price of Wigoby, which contains the same active ingredient as Ozempic but is approved to treat obesity.
Pfizer said the modest price increases for its products will help it address rising drug discovery and development and other business costs.
Small price increases still matter
Although small, many of the drug price hikes earlier this year still exceeded the rate of inflation, which the paper said was 2.7%. Latest information from the Bureau of Labor Statistics. And that means penalties in Medicaid and other programs will be triggered.
But companies are raising prices above inflation anyway.
“To me, it means that we’re acknowledging through our actions that there’s a lot of money to be made outside of government programs, so it’s worth paying the fees and penalties,” Ciaccia says.
meanwhile New report from AARP It shows that small increases can add up over the life of a drug. The organization found that for the top 25 drugs in Medicare Part D, the average price increase over the life of the drug was 98%. This means that the price of the drug has almost doubled.
Consumers can pay more or less.
If your insurance doesn’t cover the medicine you need, you’ll end up paying more.
If your drug is covered, you may not have to pay the full sticker price, but your copay may be paid at the pharmacy counter or through coinsurance. This amount is often tied to the drug’s list price, so the higher the price, the higher your out-of-pocket costs may be.
But another possibility has to do with the complex health care system and its incentives. In some cases, higher prices mean more leeway for drug companies to negotiate deep discounts and rebates with health plans. And that incentive can put the drug in a better position, or tier, on the formulary, the menu of drugs that health insurance pays for. Top-rated drugs often have the lowest out-of-pocket costs.
“List price increases may therefore paradoxically lead to better access to formularies because of the large rebates associated with them,” he says. Amet Sarpatwari He is a professor at Harvard Medical School, where his research focuses on the impact of law and regulation on pharmaceuticals and public health.
For consumers, this means that even if the list price has increased, the cost of the drug may be lower due to lower out-of-pocket costs.
Some prices have dropped
Some medicines have been reduced in price.
The most notable decrease was in the type 2 diabetes drug Januvia. It was down 42%, which Ciaccia and Sarpatwari both told me was puzzling.
“It’s something that wasn’t on my bingo card,” Ciaccia says.
Januvia is one of the first 10 drugs to be priced under Medicare under the Biden administration as a result of the Inflation Control Act. However, the newly reduced Medicare prices will not take effect until January 2026.
Merck said it did not negotiate the price down, but hoped it would be closer to the price paid for the insurance plan after discounts and rebates.
Only time will tell how that new price will impact consumers in a complex healthcare system.
