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The Price of New Prescription Drugs Is Skyrocketing

·2 min read

Warning: The prescription drug data below may be hard to swallow and could cause nausea, heartburn and indigestion.

The median launch price of new prescription drugs skyrocketed from about $2,000 a year in 2008 to more than $180,000 in 2021, according to a new study published in the medical journal JAMA.

The increase amounts to a 20% annual rate of inflation, according to the researchers at Brigham and Women’s Hospital in Boston. “Prices increased by 11% per year even after adjusting for estimated manufacturer discounts and changes in certain drug characteristics, such as more oncology and specialty drugs (eg, injectables, biologics) introduced in recent years,” the study says.

In 2020 and 2021, 47% of new drugs had initial prices set above $150,000 a year, up from 9% from 2008 to 2013, the study found.

The researchers looked at 548 brand-name drugs introduced between 2008 and 2021 using price data from the firm SSR Health. The analysis of discounted prices used a subset of 305 drugs for which estimated net prices were available.

Why it matters: The study notes that the trend in prices for new drugs outpaces increases in other health care services. “While public attention has focused on year-to-year price hikes for existing prescription medicines, the study indicates that soaring launch prices also contribute to rising costs,” Bloomberg’s Robert Langreth writes.

“These data demonstrate why we DESPERATELY need drug pricing reform,” Dr. Benjamin Rome, a health policy researcher and lead author of the study, wrote on Twitter. “But existing Congressional proposals (eg, Build Back Better) would do NOTHING to control prices for new drugs. The BBB Medicare negotiation provisions specifically EXCLUDE new drugs for 9-13yrs.”

What’s the solution? Rome wrote that the price increases come about because the United States lets drugmakers “set prices as high as they choose” and then allows them an average of 12 to 17 years on the market without direct competition. “Why not negotiate prices of newly approved drugs based on evidence of clinical benefit? In fact, the US is the only high-income country that DOESN’T evaluate and negotiate prices for new drugs.”

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