September 28, 2018

Rx prices are still rising—despite Trump's call for price cuts

Daily Briefing

    More drugmakers have increased the U.S. list prices of drugs than have lowered them so far this year, according to an Associated Press analysis published Monday.

    Learn 5 ways to control the flow of drug expenditures

    Analysis details

    For the analysis, AP examined data from the health information analytics firm Elsevier on the U.S. list prices of brand-name prescription drugs from Jan. 1 through July 31 of each year from 2015 through 2018.

    The data included in the analysis represented more than 97% of the changes in U.S. list prices for several types of drugs and drug dosages and formulations, such as injectable, liquid, and pill versions of various drugs. The 3% of changes in U.S. list prices not included in the analysis represented cases in which AP could not determine what a drug's previous list price had been or whether a new product had been launched. In total, AP analyzed 26,176 changes in U.S. list prices for brand-name prescription drugs.

    AP also surveyed 24 large drugmakers to determine whether they planned to lower the list prices of their drugs.

    Findings

    Overall, AP identified fewer list price increases for brand-name drugs in the first seven months of 2018 when compared with previous years. However, AP found the number of drugmakers increasing the list prices of brand-name drugs in 2018 remained higher than the number of drugmakers decreasing list prices of such drugs this year.

    Specifically, AP identified 4,412 U.S. list price increases for brand-name drugs that occurred during the first seven months of 2018, compared with 46 list price decreases. According to AP, there was a ratio of 96 list price increases for every one list price decrease during the first seven months of this year.

    AP found that the number of list price decreases in June and July of 2018—after President Trump in May said drugmakers were planning to soon announce "massive" reductions in drug prices—was higher, at 24, than the number of list price decreases that occurred in June and July of 2017, at 15.

    AP also found that both the median list price increase and decrease declined in June and July of 2018. According to AP, the median list price increase dropped to 5.2% in June and July of 2018, down from 8% in June and July of 2017. In addition, the median price decrease in June and July of 2018 was 11%—a smaller median decrease than in previous years, AP reports.

    Of the 24 drugmakers AP surveyed, none of them said they planned to lower the U.S. list prices of their drugs. AP reports that, in most cases, the drugmakers said they needed to continue to increase the list prices of their existing drugs to pay for the research and development of new treatments, which is an argument critics often dispute.

    Comments

    Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, said the AP analysis shows there has not been a significant move toward lower list prices among drugmakers.

    Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota, said, "The rate of increases has slowed down, but prices haven't decreased." Schondelmeyer noted drugmakers often temporarily restrain price increases around the times of government elections, when they face higher levels of criticism over drug prices, but typically resume price increase when drug prices are no longer a focus for politicians.

    In addition, Schondelmeyer said he expects drugmakers will wait to decide whether to reduce their U.S. list prices under Trump's drug pricing blueprint, noting that drugmakers are unlikely to change their pricing strategies if the blueprint does not result in substantial policy changes.

    However, Kay Morgan, a drug pricing expert at Elsevier, said the data indicate drugmakers are becoming more cautious when they raise the list prices of drugs. Morgan said, "It's everyone saying, 'This has got to stop,'" noting that advocacy groups, federal lawmakers, patients, and the media are drawing attention drug price hikes and helping drive change.

    HHS Secretary Alex Azar said, "I am not counting on the altruism of pharma companies lowering their prices," and there is no "overnight solution" to address high list prices for prescription drugs. However, Azar said the Trump administration has made progress on the proposals included in Trump's drug pricing blueprint, such as granting prescription drug programs more negotiating authority and increasing generic competition (Johnson/Forster, Associated Press, 9/24; Baker, "Vitals," Axios, 9/25; Weixel, The Hill, 9/24). 

    Next, learn 5 ways to control the flow of drug expenditures

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