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Illustration: Eniola Odetunde/Axios

The average launch prices for new brand-name drugs have skyrocketed over the past decade, according to an analysis from drug research firm 46brooklyn.

Why it matters: The U.S. prescription drug market increasingly has thrived on high initial price tags and subsequent increases. That has resulted in higher premiums and out-of-pocket costs for new drugs, as well as more expensive generics.

Between the lines: Pharmaceutical companies are not raising prices of existing drugs as frequently as they used to, due in part to political heat. However, more new drugs are coming out with 6- and 7-figure list prices — most notably drugs like Zolgensma and Luxturna.

  • Higher starting prices for brand-name drugs are costly on their own, but they also beget higher starting prices for their generics.

By the numbers: Using data from Elsevier's Gold Standard Drug Database and the federal government, analysts at 46brooklyn organized the launch prices of both brand and generic drugs for each year they came out, going back to 2006.

  • The median monthly price of a new brand-name drug has increased 381% since 2006 (from $150 to $722).
  • The median monthly price of a new generic drug has increased 712% since 2006 (about $100 to almost $800).
  • These are list prices, not net prices, and therefore do not reflect any rebates given by manufacturers to middlemen. But these prices still affect patients' out-of-pocket costs, and some list prices could be close to actual net prices paid depending on the contract and marketplace.

One step further: Almost 80% of all generic drugs studied had no decrease in their average wholesale price in the past 5 years.

The bottom line: There is systemic failure in the pharmaceutical market. Rising starting points for drugs benefit every entity, except patients.

  • Brand-name drugmakers reap the first rewards and usually don't provide a lot of, if any, rebates for new drugs with no competitors.
  • Generics manufacturers often don't lower prices by much after a drug patent elapses.
  • Pharmacy benefit managers pocket the difference between what they charge insurance programs for overpriced generics and what they pay pharmacists.
  • Wholesalers and pharmacists collect their smaller cuts along the way.

Go deeper: The drug pricing maze

Editor's note: This post has been updated to note the analysis looks at list prices, not net prices.

Go deeper

Europe's energy reliance on Russia is a crucial shield for Putin

Photo: Pavel Bednyakov/Sputnik/AFP via Getty Images

Cracks in the NATO alliance regarding sanctions for Russia should President Vladimir Putin order troops into Ukraine are in large part based on energy supply concerns.

Why it matters: Russia holds tremendous leverage over some European countries because it provides roughly 40% of Europe's natural gas supply. In Germany, this figure is greater than 50%.

Why the Fed might want to jolt the markets

Fed chair Jerome Powell at a hearing earlier this month. Photo: Brendan Smialowski-Pool/Getty Images

So far, financial markets are cooperating nicely with the Federal Reserve's efforts to restrain inflation. They're doing the Fed's work for it by creating tighter financial conditions, in a distinctly non-panicky way.

  • But as the central bank's policymakers meet this week, an underlying question they face is whether the adjustment is happening too slowly.
Kate Marino, author of Markets
4 hours ago - Economy & Business

Omicron outbreaks were bad for business in January

Data: New York Federal Reserve Bank; Chart: Axios Visuals

Emerging anecdotal evidence shows just how hard the recent rise in COVID-19 cases hit businesses in early January — but that hasn't hurt some business leaders’ longer-term views of their companies' prospects.

Why it matters: Increasingly, the economic recovery has come in fits and starts that move in tandem with new peaks in cases. Look no further than the thousands of canceled flights and shuttered Broadway theaters in the wake of the Omicron variant's spread over the last few months.