Jun 8, 2022 - Health

New drugs come with high price tag, research finds

Illustration of a turn over pill bottle the pills forming an upward trending arrow.

Illustration: Sarah Grillo/Axios

Nearly half of all drugs launched in the last two years initially cost above $150,000 a year, according to new research that's landing as Congress renews discussions about drug price controls.

Why it matters: The "exponential" growth during the pandemic offers more stark evidence of how pharmaceutical companies raised costs in the face of lawmakers' vows to enact price controls and even add them to COVID relief packages.

By the numbers: From 2008 to 2021, launch prices for new drugs increased by 20% per year, according to the research letter published in JAMA Tuesday.

  • Prices rose 11% per year in 2020–2021, even after adjusting for manufacturer discounts and a shift toward more oncology and specialty drugs, said the researchers from the Program on Regulation, Therapeutics, and Law at Brigham and Women's Hospital.
  • In contrast, overall health care spending typically increases around 5% annually.
  • Earlier this year, drug companies raised the prices on hundreds of existing medications, with most prices up 5% to 6% on average.

Between the lines: The researchers argue for the kind of prospective Medicare drug-price negotiations that are back in play as Democrats in Congress struggle to craft a slimmed-down Build Back Better package.

That's been a non-starter for the GOP, as well as the pharmaceutical industry, which says it could have a chilling effect on innovation.

The big picture: Key centrist Democratic Sen. Joe Manchin signaled he is ready to come to the table on a prescription drug price deal during an AARP event.

  • "By allowing Medicare to negotiate drug prices, capping the cost of insulin at $35 per month and allowing the importation of drugs from Canada, we can lower prescription drug prices in America," Manchin told AARP West Virginia members last week.
  • Manchin and Senate Majority Leader Chuck Schumer are discussing a revised bill that would, among other things, include drug pricing provisions from a House-passed BBB and make the 50 drugs with the highest spending in Medicare subject to negotiation. The drugs would have to be single-sourced, lacking a generic equivalent.

Yes, but: We've heard this kind of talk many times before. Even with Democrats eager for a win heading into the mid-term elections — and with compelling data charting rising drug costs — little has changed for months and the outcome is far from certain, per Cowen analyst Rick Weissenstein.

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