Net Drug Prices Rose 3.5 Times the Inflation Rate From 2007 to 2018

According to a new analysis published in JAMA, net prices for hundreds of drugs rose 3.5 times the rate of inflation from 2007 to 2018.

During this 11-year period, list prices on 602 medications rose 159%, or 9% per year. However, after accounting for rebates and discounts, net prices had increased 60%, or an average of 4.5% per year.

“Previously, we were limited to studying list prices, which do not account for manufacturer discounts,” said Inmaculada Hernandez, PharmD, PhD, an Assistant Professor at the University of Pittsburgh’s School of Pharmacy, who co-authored the study. “List prices are very important, but they are not the full story.”

The greatest net price increases during this period were seen in treatments for multiple sclerosis, where prices increased 157%; high cholesterol, with a 95% increase; and rheumatoid arthritis, with a 73% increase. After adjusting for rebates and discounts, the jump in prices of chemotherapy drugs was slightly less, at 35% overall. Discounts were found to be higher for Medicaid than other payers, likely due to regulation requiring rebates based on price increase over inflation.

The authors also observed that, the increases in net prices peaked in 2012 and 2014, exceeding 10%, before slowing in 2015 and staying somewhat stable until 2018. “We’re seeing a lot of discussion that net prices have stabilized over the last few years, and that does appear to be the case,” said Walid Gellad, MD, MPH, an Associate Professor of Medicine who heads the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh. “But the stabilization of net prices comes on top of large increases over the last decade, many times faster than inflation, for products that have not changed over this time period. In addition, this net price is an average, with substantial variability across payers and drugs.”

One limitation of the study was that the researchers did not examine out-of-pocket costs, so the extent to which these increases affected consumers is unclear.

Sources: STAT, March 3, 2020; Hernandez I, San-Juan-Rodriguez A, Good CB, et al. Changes in List Prices, Net Prices, and Discounts for Branded Drugs in the US, 2007-2018. March 3, 2020. JAMA. 2020;323(9):854-862.