Drugmakers have raised prices on more than 750 brand drugs in the United States so far in 2021, according to data analyzed by 46brooklyn Research. The drugmakers include Pfizer Inc., Novartis, and GlaxoSmithKline plc (GSK).
Key Takeaways
- Drugmakers have announced price increases on more than 750 brand drugs in the U.S. so far in 2021, according to new research.
- The cost of brand drugs has gone up over time due to drugmakers focusing more on medications for rare diseases and older (less expensive) brand-name drugs going generic.
- Taking drug utilization into account, average price increases are going down over time, the research indicates.
How Much Are Prices Going Up?
The median percentage increase for brand drugs has been 4.8%, and companies overall have kept price increases to 10% or below. Of large drug companies that have raised prices, Pfizer and Sanofi have posted increases of 5.1% or less. Novartis’ price increases range from 2% to 7%, while GSK’s price increases range as high as 10%, according to the data.
These changes come as drugmakers deal with repercussions of the COVID-19 pandemic, which has resulted in fewer doctor visits and decreased demand for some medications. Companies are also fighting the Trump administration’s new drug price-cutting rules, which would tie Medicare reimbursements for 50 drugs to the lowest prices paid in some other countries.
That said, although drug prices are going up, researchers point out that frequently, the biggest price increases are on drugs that few people take. When you take drug utilization into account, average price increases are getting smaller compared to previous years.
“All of the drugs that experienced a change, we overlaid that with Medicaid utilization data and weighted it,” says Antonio Ciaccia, chief executive officer of 46brooklyn Research and co-author of the research. “The weighted average increase is going down over time.”
Other Factors That Are Driving Drug Costs
A variety of other factors also affect drug pricing, including the fact that manufacturers are focusing more on niche markets.
“More drug manufacturers, for better or worse, are investing more in bringing drugs to market to treat rarer and more niche diseases,” Ciaccia says. “Research and development costs don’t change, so you’re essentially investing more to treat fewer people. It stands to reason that those drugs, when they hit the market, are probably going to be more expensive than some of the legacy patent drugs.”
It’s also true that the oldest of brand-name drugs that came to market 15 years ago are starting to cycle off patent and go generic. “It’s creating a pressing-up effect from the brand-name drugs going generic, and also the new drugs coming to market are raising the ceiling,” Ciaccia says. “I’m not saying it’s good or bad. That’s just how the system is designed.”
Another wrinkle in drug pricing is that list prices are not necessarily the real prices of drugs. Drug manufacturers sometimes make discounts available on certain medications, making the real price of the drug much lower than the data reflect. “Sometimes you might see a drugmaker raise a price abnormally high, but underneath that, that we don’t get to see, they could be discounting that drug more than any other drugs in the bucket,” Ciaccia says. “If you look at post-rebate prices, drug prices are actually going down over time.”
More Price Hikes Are Likely on the Way
More drugmakers are expected to announce price increases in coming days. In previous years, about 70% of Medicaid brand-name drug spend has been affected by price changes, but that number stands at just 50% so far in 2021.
