Get the Facts on Big Pharma’s Year of Out-of-Control Launch Prices, Price Hikes, Anti-Competitive Tactics and Massive Spending on a Debunked Blame Game
Despite unprecedented scrutiny of Big Pharma’s egregious pricing and anti-competitive practices and major progress in Washington toward holding the pharmaceutical industry accountable, Big Pharma continued to double down on a business-as-usual approach to putting profits over people in 2022.
From hiking prices on existing products, bringing new drugs to market with increasingly out-of-control launch prices, gaming the patent system to block more affordable alternatives, hiking prices on COVID-19 treatments and vaccines ahead of commercial distribution, skirting anti-kickback laws by using so-called patient-assistance programs to boost profits and spending hundreds of millions of dollars trying to evade accountability and blame others – it was another year of bad behavior for Big Pharma.
In addition, as 2023 approaches, Big Pharma can be counted on to engage in one of the industry’s time-honored traditions: Hiking prices on hundreds of brand name prescription drugs in the first weeks of the new year.
Ahead of Big Pharma’s expected January price hikes, get a Dose of Reality on some of brand name drug companies’ worst highlights in 2022.
HIKING PRICES ON EXISTING DRUGS
More Than 800 Price Hikes in 2022
In 2022, Big Pharma maintained the industry’s tradition of hiking prescription drug prices in two large batches – one to begin the year in January and the other around the mid-year mark in July.
In the first month of the year, the pharmaceutical industry raised prices on 791 brand name drugs by an average of 4.9 percent. Examples include:
Mid-year, Big Pharma companies increased prices on almost 100 additional brand name products.
Hiking Prices on COVID-19 Treatments and Vaccines
Big Pharma is also increasingly looking to profiteer off COVID-19 treatments and vaccines as payment moves from the government to the commercial market.
In October, Big Pharma giant Pfizer announced plans to “as much as quadruple” the price of the company’s COVID-19 vaccine – to a price that represents a “10,000 percent markup over what experts have estimated it costs the vaccine makers to produce the shots.”
In September, fellow Big Pharma drug maker Moderna revealed in a presentation to shareholders plans for a six-fold increase to the price of its COVID-19 vaccine, branded under the name Spikevax.
And in August, Eli Lilly hiked the price of its monoclonal antibody treatment for COVID-19 ahead of a transition to the commercial market.
1,200 Price Hikes Above Inflation Between 2021 & 2022
Big Pharma’s price hikes also consistently outpace inflation. In October, the U.S. Department of Health and Human Services (HHS) released an analysis that found Big Pharma increased prices at rates higher than inflation on more than 1,200 drugs between 2021 and 2022 – with an average price increase of 31.6 percent.
Price Increases Without Clinical Benefits Cost Americans $805 Million
In December, new data released by the Institute for Clinical and Economic Review (ICER) showed Big Pharma continually raises prices on blockbuster drugs without any increase to their clinical benefit for patients. The analysis found that unsubstantiated price hikes on seven of the ten most popular drugs in 2021 increased overall drug spending by $805 million in the U.S. Additionally, ICER found brand name manufacturers hiked prices in 2020 on all three of the most expensive drugs in the Medicare Part B program with no meaningful increases in efficacy to justify the increases.
EGREGIOUS LAUNCH PRICES ON NEW DRUGS
Median Annual Launch Price in 2022: $257,000
A Reuters analysis in August found that Big Pharma is on pace for record-shattering launch prices on new drugs entering the pharmaceutical market. Reuters analyzed the pricing of 13 novel drugs approved by the U.S. Food and Drug Administration (FDA) to treat chronic conditions. According to the analysis, the median annual price of the new treatments in 2022 was $257,000 — compared with a median annual price of $180,000 for 30 medications approved in 2021.
According to the Reuters analysis, seven other treatments brought to market in 2022 also launched with annual price tags over $200,000. Johnson & Johnson’s Carvykti, used to treat multiple myeloma, launched in February at the highest price of any drug brought to market so far this year, with a staggering price tag of $465,000.
Launch Prices Increased 20 Percent for 14 Years
An academic study published in The Journal of the American Medical Association (JAMA) in June, by researchers affiliated with Harvard University and Brigham and Women’s Hospital, found that for 14 years, “from 2008 to 2021, launch prices for new drugs increased by 20 percent per year.”
Coverage in Bloomberg noted that “over 47 percent of new drugs introduced in 2020 and 2021 cost more than $150,000 per year, compared to just nine percent of new drugs from 2008 to 2013.” And overall, drug prices have risen at rates more than double that of other pillars of health care spending.
While studies and reports demonstrate that Big Pharma’s launch prices are trending higher, several brand name drug makers launched new drugs this year at egregious price points, further driving home the point.
Egregious 2022 Launch Price Highlights
In November, pharmaceutical companies CSL Behring and uniQure set a $3.5 million price tag on their hemophilia drug Hemgenix, which was recently approved by the U.S. Food and Drug Administration (FDA) as a treatment for adults with Hemophilia B. The pricing of the drug makes it the most expensive drug in the world and is more than $600,000 higher than what the Institute for Clinical and Economic Review (ICER) estimated for the upper limits of a fair price.
Also in November, Provention Bio set a $193,900 price tag for a course of treatment on the brand name prescription drug Tzield, which was approved by the FDA as a treatment for Type 1 diabetes. According to Reuters, Tzield will launch at a price of $13,850 per vial, with a total of 14 vials needed for a full course of treatment, for a total cost of $193,900. Wall Street analysts expressed shock and concern at the pricing of the brand name drug — which far exceeded expectations.
In October, brand name drug maker Amylyx set a list price of $158,000 annually on the company’s new and unproven treatment for amyotrophic lateral sclerosis (ALS), Relyvrio, following FDA approval. The FDA’s approval came even though the drug has only completed Phase II trials, while most FDA-approved drugs typically require Phase III trials. Amylyx’s $158,000 price tag for Relyvrio was between five and 17 times what experts estimated would be a fair price for the treatment that lacks clear evidence on its clinical value for patients.
CONTINUING TO GAME THE SYSTEM TO BLOCK COMPETITION
A Case Study in Big Pharma’s Greed: Keytruda
In December, Big Pharma giant Merck announced that it will seek new patents on its blockbuster cancer drug Keytruda, which last year brought in over $17 billion for the company. According to reporting from Reuters, Merck is seeking “to patent a new formulation of its $20 billion cancer immunotherapy Keytruda that can be injected under the skin, allowing it to protect its best-selling drug from competition expected as soon as 2028.”
This is just the latest example of a strategy Big Pharma companies have used repeatedly to extend their monopolies on blockbuster products – filing for patents for changes such as intake method or dosage that don’t represent truly new innovations or improve clinical benefits for patients. This enables Big Pharma to add to patent thickets designed to block competition from more affordable alternatives, keep drug prices high and boost profits.
Dr. Shailender Bhatia, an oncologist at the Fred Hutchinson Cancer Center in Seattle said, “I don’t think it’s going to improve the safety or the effectiveness of the drug.”
“It’s the way the pharmaceutical companies now use that system — it’s all about taking up as much space as possible, making it difficult for anybody to enter,” Tahir Amin, co-founder of Initiative for Medicines, Access & Knowledge (I-MAK), said in Reuters coverage of the move. “Keytruda is going to be the next Humira by all accounts.”
According to research from I-MAK, Merck has filed for 129 patent applications on Keytruda – more than half of which were filed after the drug’s initial approval by the U.S. Food and Drug Administration (FDA). The Big Pharma company has been granted 53 patents on this one drug. I-MAK estimates that Americans will spend at least $137 billion on Keytruda while the drug faces no competition due to its extended exclusivity that already totals more than eight years — without reflecting the added impact of the Big Pharma giant’s new patent strategy.
Targeting Blockbuster Products
A May 2022 study published in JAMA Health Forum found brand name drug companies target products that generate major profits for reformulation to extend monopoly pricing power and block generic competition from entering the market.
Brand Name Inhalers
An academic analysis published in Health Affairs in May 2022 found manufacturers of brand name inhalers used to treat asthma and chronic obstructive pulmonary disease engage in anti-competitive tactics to keep more affordable generic competition from entering the market.
SKIRTING ANTI-KICKBACK LAWS TO BOOST PROFITS
In September, a study in Health Affairs demonstrated how Big Pharma companies skirt anti-kickback protections in federal law by using so-called patient assistance charities to undermine competition in the market and pad their bottom line.
The study, conducted by researchers affiliated with Harvard University, Northwestern University and the University of Southern California, Los Angeles, found Big Pharma’s share of sales for brand name medicines used to treat specific conditions covered by their charities increased over time. For the 10 costliest treatments, the brand name manufacturer’s share of sales increased from 67 percent in 2010 to 89 percent in 2017, demonstrating that “manufacturers could effectively assist in the purchase of their own medications by contributing to condition-specific charities.”
According to the study’s authors, overall “donations by the leading manufacturer of drugs for each condition were often likely to be profitable.” The authors argue that “the current regulations or enforcement permit donations that violate the spirit of Medicare’s Anti-Kickback Statute.”
Also in September, brand name drug maker Biogen agreed to a $900 million settlement with the U.S. Department of Justice (DOJ) over claims the company provided illegal kickbacks to doctors to prescribe more of the company’s drugs, including brand name multiple sclerosis drugs Avonex and Tecfidera, in order to boost profits.
According to the DOJ, the complaint alleges that from 2009 to 2014, Biogen “offered and paid remuneration, including in the form of speaker honoraria, speaker training fees, consulting fees and meals, to health care professionals who spoke at or attended Biogen’s speaker programs, speaker training meetings or consultant programs to induce them to prescribe the drugs.” The alleged scheme “resulted in fraudulent payments by Medicare and Medicaid for the drugs,” according to the Wall Street Journal.
As a result of the settlement, Biogen will pay $843,805,187 to the United States and $56,194,813 to 15 states.
SPENDING MILLIONS ON A DEBUNKED BLAME GAME
Big Pharma spent more than $285 million in 2021 and 2022 fighting against drug pricing solutions and pushing a debunked blame game designed to evade accountability and point a finger at others in the supply chain. Read more about Big Pharma’s massive spending aimed at keeping drug prices high from its own lobbying organizations and via Astroturf third parties.
BIG PHARMA’S OUT-OF-TOUCH ATTITUDE
Dismissing Affordability Concerns as “Ludicrous”
In December, Regeneron Pharmaceuticals co-founder and Chief Scientific Officer George Yancopoulos earned recognition for arguably the most out-of-touch Big Pharma comments of the year when he brazenly dismissed concerns with the affordability of brand name drugs priced in the millions of dollars during a panel discussion with CNBC reporter Bertha Coombs at the Milken Institute’s Future of Health Summit.
“Forget about paying for it, forget about that,” Yancopoulous said when asked about how patients and the U.S. health system can afford egregiously priced Big Pharma treatments. “I’m sorry but think about how ludicrous your point is,” Yancopoulous continued, as he was booed by the audience, before calling for greater returns for Big Pharma companies and massively expanded taxpayer investments in research that subsidizes the development of new blockbuster products for the pharmaceutical industry. “We should start by increasing the NIH budget by tenfold okay and also promoting capital systems that promote increased incentives for innovation.” Read more here.
“Courageous” to Price Treatment Ten Times Estimate for Fair Price
During a January interview at the J.P. Morgan Healthcare Conference, Biogen CEO Michel Vounatsos defended the Big Pharma’s company’s decision to price its unproven Alzheimer’s treatment at $56,000 per year, arguing that the price was “evidence-based” and “a price that eventually we could defend.” Vounatsos went a step further and said that the company’s decision to slash this price in half, after broad backlash from patients, lawmakers, drug pricing advocates and medical experts was “courageous.”
What Biogen’s CEO left out, is that Biogen’s reduced price tag for Aduhelm was still approximately three to 10 times greater than what the Institute for Clinical and Economic Review (ICER) concluded would be a fair price for the treatment with little to no proven clinical benefit for patients. ICER’s analysis found that a fair price for Aduhelm would fall somewhere between $2,500 and $8,300.
Biogen’s pricing of Aduhelm was so egregious the Centers for Medicare and Medicaid Services (CMS) announced a $21.60 increase in Medicare Part B monthly premiums for 2022, an increase of 14.5 percent, and the largest dollar figure increase in the program’s history. CMS officials cited Aduhelm’s price as a key factor in the agency’s decision to increase premiums.
The U.S. Centers for Medicare & Medicaid Services (CMS) ultimately recognized the need for more data on the drug in a finalized National Coverage Determination decision that protected seniors, taxpayers and the U.S. health care system from Biogen’s price-gouging of an unproven treatment. Read more here and here.
As policymakers return to Washington in 2023 for the start of the 118th Congress, they should take note of the pharmaceutical industry’s continued egregious behavior, build on the positive momentum to lower drug prices and advance bipartisan, market-based solutions to hold Big Pharma accountable.
Learn more about bipartisan, market-based solutions to hold Big Pharma accountable HERE.