JAMA: List Prices for Key Drugs More Than Doubled Over 10-Year Period

March 3, 2020

A special issue takes a wide-ranging look at the cost of prescription drugs.

A study of rising drug prices over the decade ending in 2018 finds that list prices more than doubled in some key categories, with prices for agents to treat multiple sclerosis (MS) rising 439%, lipid-lowering agents climbing 278%, and insulins rising 262%.1

The study, part of a special issue on drug prices in JAMA, notes that net costs are often much lower, but even these rose rapidly over the same period. The authors, led by Inmaculada Hernandez, PharmD, PhD, of the University of Pittsburgh School of Pharmacy, said the rebates, coupons, or other strategies to limit out-of-pocket costs for select patients don’t ease the pain for those paying higher shares of their income for prescription drugs. Any price breaks at the counter vary widely, the authors say.

Using data from SSR Health for branded products available before January 2007, with sales reported by publicly traded companies for 602 drugs through 2018, the authors found:

  • List prices during the period rose 159% (95% CI, 137%-181%), or 9.1% per year, while net prices rose 60% (95% CI, 36%-84%), or 4.5% per year.
  • Discounts for Medicaid rose from 40% to 75% and from 23% to 51% for other payers.
  • Increases in discounts offset 62% of the rise in list prices, but “there was large variability across classes.”
  • MS treatments (4 drugs) had the largest increases among drugs studies, with a 459% increase in list prices and a 175% in net prices.
  • Lipid-lowering agents (11 drugs) had a 278% increase in list prices and a 95% increase in net prices.
  • Insulins increased in list price by 262% and by 51% in net price.

As the authors note, the practice of rebates can have "unintended consequences." For much of the study period, discounts were not passed on to the patients paying for the drugs, but instead were spread across the premium base, so patients whose cost-sharing was based on list price saw soaring out-of-pocket costs. Manufacturers of insulin and a new lipid-lowering class called PCSK9 inhibitors have worked with some pharmacy benefit managers to change this practice and direct discounts to those paying for the drugs; however, for those patients outside these payment mechanisms, the high list price can remain a barrier.

In a series of tweets, Hernandez said the key insights from the data were that net prices still increased 3 times faster than inflation, and "the widening gap between net and list is concerning, because it will exacerbate disparities in access," because the uninsured and underinsured patients still feel the effects of the list price.

Even a pharmaceutical leader agreed that drug prices are a sticking point. “Out-of-pocket drug affordability has emerged as a central focus of the overall healthcare affordability debate, one that cuts across political parties at the federal, state, and community levels and is likely to intensify in the coming months,” wrote Merck chairman, president, and chief executive officer Kenneth C. Frazier, JD, in a guest editorial.

Nearly 10 years after President Barack Obama signed the Affordable Care Act, prescription drug prices are a hot topic in the 2020 presidential contest, especially insulin costs. Thus far, however, a bill passed by the House in December to require the government to negotiate for drug prices has stalled. A bipartisan Senate Finance Committee plan would set annual out-of-pocket caps for Medicare beneficiaries and call for rebates if prices exceed inflation. However, in another editorial in the issue, Chaarushena Deb and Gregory Curfman, MD, write this provision is “the greatest obstacle to its passage, as many Republican senators oppose the idea as a form of government price setting.”3

As Deb and Curfman note, the Kaiser Health Tracking poll has found that 4 of 5 respondents believe that drug company profits contribute to the high costs paid at the counter. They also examine the pattern of discounting and “patent thickets” that prevent biosimilar competitors from reaching the market, using AbbVie’s handling of adalimumab (Humira) as their case study.

The argument for years, from the perspective of the pharmaceutical companies, has been that profits are needed to spur innovation to bring life-saving therapies to market. But how much is too much?

A study by Fred D. Ledley, MD, et al,4 examines the industry against other major sectors and finds that from 2000 to 2018, profitability of major pharmaceutical companies was “significantly greater than other large public companies, but the difference was less pronounced when considering company size, year, or research development expense.”

In his editorial, Frazier said the JAMA articles make a point “that should not be overlooked: the biopharmaceutical industry is adjusting its business model in response to concerns about affordable access to medicines and is still making substantial research and development investments to sustain the innovation ecosystem.”2

He called for the following: (1) the industry “has a duty” for responsible pricing practices, (2) the rebate system must be reformed, (3) the industry must respect the intent of the patent protections and stop “gaming the system,” (4) the industry must collaborate on value-based contracts, and (5) the industry must align with other parts of healthcare for reform.

References

1. Hernandez I, San-Juan-Rodriguez A, Good CB, Gellad WF. Changes in list prices, net prices, and discounts for branded drugs in the US, 2007-2018, JAMA. 2020;323(9):854-862. doi: 10.1001/jama.2020.1012.

2. Frazier KC. Affording medicines for today’s patients and sustaining innovation for tomorrow. JAMA. 2020;323(9):831-833. doi: 10.1001/jama.2020.0167.

3. Deb C, Curfman G. Relentless prescription drug price increases. JAMA. 2020;323(9):826-828. doi: 10.1001/jama.2020.0359.

4. Ledley FD, McCoy SS, Vaughan G, Cleary EG. Profitability of large pharmaceutical companies compared with other large public companies. JAMA. 2020;323(9):834-843. doi: 10.1001/jama.2020.0442.