Big Pharma Price Hikes, Rising Launch Prices And Patent Abuse Impose Massive Costs on Patients, Taxpayers, and the U.S. Health Care System
Tomorrow, the U.S. House Committee on Energy and Commerce Health Subcommittee is scheduled to hold a hearing to discuss health care spending in the United States.
Ahead of the hearing on this important topic, get a Dose of Reality on Big Pharma’s egregious pricing practices and anti-competitive tactics that are the root cause of high prescription drug prices, and that impose massive costs on patients, taxpayers, and the U.S. health care system.
Big Pharma’s Patent Abuse Increased Costs By More Than $40 Billion in Just One Year
In May 2023, The American Economic Liberties Project and the Initiative for Medicines, Access & Knowledge (I-MAK) released an analysis examining the staggering cost of Big Pharma’s anti-competitive practices on the U.S. health care system and American patients. The analysis found that Big Pharma’s anti-competitive tactics, including patent abuse, cost U.S. consumers “an additional $40.07 billion on pharmaceuticals,” in just one year, 2019.
The American Economic Liberties Project and I-MAK conducted the analysis by examining the top 100 best-selling prescription drugs in the Medicare Part D and Medicaid programs in 2019. From this data, they found that several anti-competitive tactics commonly employed by Big Pharma “increased Part D gross spending by 14.15 percent, or $14.82 billion, and increased Medicaid gross drug spending by 9.05 percent, or $3.15 billion.”
By assuming “all U.S. retail brand drug spending was similarly impacted,” the report concludes Americans paid as much as $40.07 billion extra for brand name prescription drugs in 2019 due to Big Pharma’s anti-competitive tactics.
Big Pharma’s Patent Thickets On Just Five Drugs Cost Over $16 Billion In a Single Year
In January 2023, Matrix Global Advisors released a report titled, “Patent Thickets and Lost Drug Savings,” that quantified the one-year cost of lost savings on five brand name drugs around which Big Pharma has built especially egregious patent thickets. The five drugs were AbbVie’s autoimmune drug Humira and oncology drug Imbruvica, Regeneron’s ophthalmology drug Eylea, Amgen’s autoimmune drug Enbrel and Bristol Myers Squibb’s oncology drug Opdivo.
The report assesses what the savings would be for these five drugs if “a steady state of competition [existed] where generics and biosimilars have achieved price discounts and uptake currently observed in the market.” Based on these calculations, the estimated one-year cost of patent thickets on each of these brand name drugs was:
This amounts to a total of more than $16 billion.
Unjustified Price Hikes Dramatically Increase Costs
In December, The Institute of Clinical and Economical Review (ICER) released a new analysis which found that brand name drug makers’ unjustified price hikes on just eight prescription medications cost the U.S. an additional $1.2 billion in 2022.
ICER’s most recent Unsupported Price Increase Report examined substantial price hikes on prescription drugs without any new clinical evidence or improvements to justify the increases. Several pharmaceutical giants were on this year’s list of top offenders, including AbbVie, Johnson & Johnson, Pfizer, and Amgen, underscoring that Big Pharma’s price hikes are about boosting these companies’ profits, not delivering innovation or value for patients.
Here are some takeaways from the ICER analysis:
Price Hikes Above Inflation Lead to Major Increased Costs for Consumers
A January report from AARP finds Big Pharma “consistently” increased prices above the rate of inflation between 2006 and 2020. In fact, the report found that Big Pharma increased prices on 943 blockbuster drugs widely used by patients faster than the rate of inflation “in all but one year between 2006 and 2020.”
AARP’s most recent Rx Price Watch report also had several other key takeaways, including:
Pharma Shows No Signs of Slowing Down: January Price Hikes Increase to 775
A report earlier this month from the Wall Street Journal found that Big Pharma hiked prices on 775 brand name prescription drugs in the first two weeks of the year, with the median price increase outpacing the current rate of inflation.
The analysis from The Wall Street Journal and 46brooklyn Research found Big Pharma “raised list prices on 775 brand-name drugs,” in the first two weeks of 2024, “by a median of 4.5 percent,” outpacing “the rate of inflation, which ticked up to 3.4 percent in December.”
Earlier data from AnalySource found Big Pharma increased the price of 556 drugs in just the first week of the year, with an average price increase of 3.92 percent. AnalySource also found at least ten increases of 10 percent.
Notable price increases so far this month from Big Pharma giants include:
Big Pharma is also increasingly setting egregious prices on new drugs as they are brought to market.
Median Annual Launch Price in 2022: $222,003
In January, Reuters released an analysis which found that the median annual price among drugs approved by the FDA in 2022 exceeded $200,000. In the second half of 2022, the median price of the 17 novel drugs approved by the FDA was $193,900, bringing the median annual price among all drugs approved in the year to $222,003.
The analysis built on an earlier Reuters analysis which found that Big Pharma was on track for record-breaking launch prices in 2022 after 13 novel drugs used to treat chronic conditions entered the market in the first half of the year with a record-setting median annual price of $257,000 – significantly higher than the $180,000 mark set over the same period in 2021.
Median Monthly Price for Newly Approved Drugs Tripled In 11 Years
In March, The Wall Street Journal released a report further detailing the extent to which brand name drug makers are increasingly targeting higher launch prices for new products as a way to circumvent heightened attention around the pharmaceutical industry’s price increases.
The analysis found that the median monthly price for a newly approved drug nearly tripled from 2011 to 2022 – increasing from $2,624 to $7,034.
Examples of high launch prices highlighted in The Wall Street Journal’s report include:
One of the biggest stories in the drug pricing space recently has been a new “gold rush” for Big Pharma around weight loss drugs. Several Big Pharma companies have launched new products in this space or received approval to prescribe older products for this new category. It’s increasingly becoming clear, however, that Big Pharma is sizing up this new market for a business-as-usual approach to price-gouging: including targeting the U.S. for the highest prices in the world and setting egregious prices amid widespread interest and demand.
Targeting The U.S. Market With Highest Prices In World
An August analysis from the Peterson-KFF Health System Tracker analyzing the price of several new weight loss drugs in the U.S. compared to other wealthy countries found that list prices for these drugs, including Novo Nordisk’s Ozempic, Wegovy and Rybelsus products, as well as Eli Lilly’s Mounjaro, are significantly higher in the U.S.
According to the Peterson-KFF Health System analysis, across all four drugs analyzed, U.S. patients are charged significantly more than other, comparable countries that are part of the Organization for Economic Co-operation and Development (OECD). For example, Ozempic has a list price of $936 for a one-month supply in the U.S. In Japan, where Ozempic has the next highest list price, the price for a one-month supply is $169. This means U.S. patients are being charged more than 5.5 times for the same drug.
The list price for Rybelsus in the U.S. is $936 for a one-month supply. The next highest price compared to other countries is $203, in the Netherlands, meaning U.S. patients pay more than four times more for this product. For Wegovy, the U.S. list price is $1,349, while the next highest price in a comparable country is $328 in Germany, again meaning U.S. patients pay more than four times more than the next comparable country for the same prescription drug.
Major Implications For The Medicare Program
While currently Medicare does not provide coverage for weight loss drugs, according to a March study in the New England Journal of Medicine, if the program did, it could have major implications for U.S. health care spending.
According to the paper, if just 10 percent of Medicare beneficiaries were prescribed one new weight loss drug, Novo Nordisk’s Wegovy, the annual cost to Medicare could range from $13.6 billion to $26.8 billion. According to KFF coverage of the paper, “[h]igher take-up rates would mean higher Medicare spending.”
Read more on how Big Pharma’s patent abuse tactics drive increased costs for consumers and the U.S. health care system HERE.
Read more on Big Pharma’s price hikes so far this year HERE.
Read more about Big Pharma’s price increases that outpace inflation HERE.
Read more about how Big Pharma is applying its egregious pricing playbook to new obesity meds HERE.
Learn more about market-based solutions to hold Big Pharma accountable and lower drug prices HERE.