See price hikes for top 25 drugs covered by Medicare; NJ drugmakers sue to stop change
Average prices for 25 widely used drugs covered by Medicare more than tripled since they were introduced to consumers, rising at a faster rate the longer they are on the market, the AARP said in a report released Thursday.
The advocacy group said the price hikes have outpaced inflation, costing taxpayers billions and forcing some seniors who have Medicare plans with cost-sharing provisions to make trade-offs between taking their medication and paying for gasoline or groceries.
"There is no justification for drug companies to engage in these types of price increases every year they are on the market, particularly increases that are so much higher than the price increases for other goods and services," said Leigh Purvis, director of health care costs and access for AARP's Public Policy Institute.
The report carries extra weight in New Jersey, which is home to 14 of the 20 biggest research-based pharmaceutical companies and has benefitted from the industry's high-paying jobs.
See the full list of drug price changes at the end of this story.
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The fight over drug prices is intensifying as provisions from the federal Inflation Reduction Act enacted last year take effect. Among them: the Department of Health and Human Services is expected to release a list Sept. 1 of the 10 brand-name drugs that will be subject to price negotiations. Some drugmakers have called that provision unconstitutional and have sued to stop it.
AARP officials, who represent Americans 50 and older, said its members on Medicare's Part D prescription drug plan take on average four to five drugs a month.
The group analyzed 2021 list price data from the Centers for Medicare & Medicaid Services, MedicarePart D Spending by Drug Dashboard, and Medi-Span Price Rx Pro.
Among its findings:
Medicare spent $80.9 billion on the top 25 Medicare Part D drugs in 2021, which were used by more than 10 million members.
List prices increased on average of 226% since they first entered the market. For example, Trelegy Ellipta, an asthma drug introduced in 2017, has increased 20%. Restasis, an eye drop introduced in 2002, has increased 330%. And Lantus, insulin introduced in 2000, is up 739%.
Prices increased faster than general inflation for 24 of the 25 drugs. Only Trelegy Ellipta rose slower than inflation.
Prices increased dramatically the longer they were on the market.
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Rebates not included
Drugmakers took issue with the report, noting that the list price didn't accurately reflect what patients pay. They said pharmacy benefit managers, which negotiate prescription drug plans for employers and insurers, don't pass rebates onto consumers.
"AARP’s study focuses on list price, which doesn’t take into account those rebates, instead of actual cost," said Dean J. Paranicas, president and chief executive officer for the HealthCare Institute of New Jersey, a trade group for the pharmaceutical industry.
"Like buying a car, drug manufacturers offer rebates to PBMs and insurance companies that reduce a medicine’s cost, on average, by 40%," he said. "But unlike buying a car where the buyer receives the rebate, insurance companies and PBMs keep the rebate for themselves instead of sending it to the patient to reduce their out-of-pocket expense."
PBMs, facing federal legislation of their own, have said they are the only check against drug companies' pricing power and have saved patients, employers and taxpayers money.
AARP acknowledged that list prices aren't the same as the confidential average manufacturers prices, called AMPs, but the Congressional Budget Office has found them to be within 90% of each other.
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Cap on costs in NJ
The study was released as lawmakers have shown more confidence in taking on drug companies. In New Jersey, Gov. Phil Murphy last month signed a bill to cap out-of-pocket costs for many residents who use insulin, asthma inhalers and EpiPens. Those covered include New Jerseyans with state insurance plans and state-regulated insurance plans.
Murphy signed a separate bill allowing the Division of Consumer Affairs to study drug prices across the supply chain, ideally bringing more transparency to high price increases.
Nationally, the Inflation Reduction Act is starting to roll out a series of measures aimed at slowing down rising drug prices. Medicare Part D recipients' out-of-pocket costs is capped at $2,000 a year. And their insulin co-payments are capped at $35 a month.
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'It's tantamount to extortion'
More provisions are set to take hold this year. Drugmakers are required pay rebates to Medicare if prices rise faster than inflation. And the federal government on Sept. 1 is expected to release the names of 10 drugs that will be subject to price negotiation.
If Department of Health and Human Services don't agree on a price, the companies can pay an excise tax or simply not sell their drugs to Medicare members.
New Jersey pharmaceutical companies, including Rahway-based Merck and New Brunswick-based Johnson & Johnson, have filed lawsuits, calling the law an overreach.
"This is not 'negotiation,'" Merck said in its lawsuit. "It is tantamount to extortion."
The industry also has said the law threatens to slow life-saving research. One report from BioNJ, a New Jersey trade group, said the law could cut research and development activity by 20%, amounting to 45,000 jobs statewide.
Purvis, from AARP, was skeptical.
"The challenge for those of us who may not necessarily believe those arguments is that it's very difficult to determine exactly what their business decisions are and why they're making them," she said Thursday. "I think one thing we can say for sure is that drug companies are profit-seeking entities; they're here to make money. So if they have a product that will make them money, that product will reach the market, and anything said otherwise is probably something that might need to get a higher level of scrutiny."
Top 25 drugs and price increases:
1. Eliquis (introduced in 2012): +124%
2. Revlimid (2005): +270%
3. Xarelto (2011): 168%
4. Humira (2002): +562%
5. Trulicity (2014): +91%
6. Januvia (2006): +275%
7. Lantus (2000): +739%
8. Jardiance (2014): +97%
9. Imbruvica (2013): +108%
10. Ozempic (2017): +38%
11. Novolog (2000): +628%
12. Xtandi (2012): +83%
13. Trelegy Ellipta (2017): +20%
14. Enbrel (1998): +701%
15. Biktarvy (2018): +29%
16. Symbicort (2006): +158%
17. Myrbetriq (2012): +114%
18. Invega (2009): +126%
19. Ibrance (2015): +53%
20. Levemir (2005): +360%
21. Victoza (2010): +209%
22. Entresto (2015): +78%
23. Restasis (2002): +330%
24. Pomalyst (2013): +102%
25. Stelara (2009): +184%
Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at mdiamond@gannettnj.com.
This article originally appeared on Asbury Park Press: Price rises for top 25 Medicare drugs; NJ drugmakers sue over new law
