Analysis Highlights How Escalating Prescription Drug Costs, Driven By Big Pharma’s Egregious Practices, a Burden for Patients and the Health Care System
A new report this week from the Health Care Cost Institute finds spending on prescription drugs in the U.S. continues to rise – and remains a burden for patients and the health care system – as Big Pharma continues to engage in egregious pricing practices. The report explains that the increasing spend per-person on prescription drugs is tied to increasing prices on medications. These increasing prices are driven by Big Pharma’s price hikes that outpace inflation, Big Pharma’s increasingly outrageous launch prices on new products and Big Pharma’s anti-competitive tactics that block more affordable alternatives from coming to market.
As the report details, in 2020, spending on prescription drugs represented, “31 percent of total per-person” spending across health care service categories. On average, that year, spending on prescription drugs amounted to $1,756 per person. The report found that from 2016 to 2020, per-person spending on prescription drugs increased from $1,054 to $1,279, a 21 percent rise. Over that same time span, “per-person spending on administered drugs increased 31 percent,” from $364 to $477.
Read more here on how Big Pharma’s pricing practices drive higher prescription drug costs:
Biannual Price Hikes
Big Pharma traditionally hikes prescription drug prices in two major batches each year — the first starting in January and the second starting in June. In January of this year alone, Big Pharma hiked prices on 791 brand name medications by an average of 4.9 percent, including on treatments for serious conditions like cancer and HIV. And in July of this year, drug makers launched price hikes on almost another 200 products.
Recent batches of biennial price hikes from Big Pharma include:
• In January 2022, Big Pharma increased prices on 791 brand name medications by an average of 4.9 percent.
• In June and July 2021, Big Pharma hiked prices on 67 brand name prescription drugs by an average of 3.5 percent.
• In January 2021, Big Pharma raised the list price of 822 brand name prescription drugs by an average of 4.6 percent.
• In July 2020: Despite calls to suspend traditional mid-year price hikes while millions of Americans grappled with economic uncertainty caused by the COVID-19 crisis, Big Pharma increased prices on more than 65 brand name drugs.
• In January 2020: Big Pharma hiked prices on more than 600 drugs by an average of 5.2 percent.
• In July 2019: Big Pharma hiked prices on 104 drugs by an average of 13.1 percent.
The industry is also increasingly setting out-of-control launch prices on new products.
Record Launch Prices
An analysis from Reuters earlier this year found Big Pharma is on pace to break records with out-of-control launch prices on new prescription drugs, further underscoring how brand name drug companies set egregious prices on their products to boost profits.
Reuters analyzed the pricing of 13 novel drugs approved by the U.S. Food and Drug Administration (FDA) to treat chronic conditions this year. According to the analysis, the median annual price of the new treatments was $257,000 — compared with a median annual price of $180,000 for 30 medications approved in 2021. Seven other treatments brought to market in 2022, not among the 13 novel drugs, also had annual price tags over $200,000.
An earlier academic study published in The Journal of the American Medical Association (JAMA) from researchers affiliated with Harvard University and Brigham and Women’s Hospital in June that found that Big Pharma has been dramatically increasing launch prices on new products that are likely to have lengthy market exclusivity for years. That study found Big Pharma companies hiked launch prices by 20 percent every year for 14 years — and that nearly half of all brand name prescription drugs now cost more than $150,000 per year when they are brought to market.
Read the full report from the Health Care Cost Institute HERE.
Learn more about Big Pharma’s history of inflation-outpacing price hikes HERE.
Read about Big Pharma’s increasingly outrageous launch prices on new products HERE.
Learn more about solutions to hold Big Pharma accountable and lower prescription drug prices HERE.