Anyone who follows pharma knows drug makers have a practice of raising prices every January. This year was no different, yet reports were more tempered than usual, perhaps even contradictory. Up, down or level, the latest numbers tell some of the story, but not the part that really matters.
Are Drug Prices Rising or Falling?
STAT reported in early January that list (i.e., wholesale) prices for 450 drugs rose by an average of 4.9%. GoodRx counted 713 price increases, also in the 5% neighborhood. Interestingly, 694 of those are brand-name drugs. Only 19 generics saw increases, but at an average hike of 12.6%.
Across the board, annual list price increases averaged 10% for much of the 2010s, according to Rx Savings Solutions pricing analysis. Since 2019 they’ve hovered below 5%. Lower, but still going up year after year.
Industry insider Adam Fein of the Drug Channels Institute wrote on January 4 that prices for brand-name drugs actually fell in 2021. Fein asserts that net prices—actual revenues the manufacturer earns after rebates, discounts and other reductions—are the ultimate indicator. He cites a 1.2% decline in 2021 based on SSR Health net pricing data, the fourth consecutive annual drop.
Good News, Bad News, Good News
Dr. Fein accurately points out that growth in list and net prices is now slower than inflation. At last check, the Consumer Price Index rose 7% in the past 12 months. And he’s right that net prices paint a truer picture of the impact on consumers and payers.
However, drug manufacturers have made the same point for years, that rising list prices don’t matter. If they didn’t, why would manufacturers keep raising them? Besides, four successive years of net-price decreases (averaging 1.8% annually, according to SSR) hardly offset years of cumulative annual growth.
In fact, based on RxSS analysis, the average prescription cost for consumers grew by more than 30% in that same 4-year period. Gallup reported in December that an estimated 45% of Americans are more worried about the cost of prescription drugs now than they were just 6 months ago.
List prices do matter. Net prices are a more accurate measure. But whatever the math is with discounts, rebates or the breakdown of who pays what, we know consumers are pinched. They’re leaving more prescriptions unfilled and are under more financial distress, especially during these early months of a new plan year after deductibles reset.
We see it in the data. We hear it every day in our members’ voices. January brings some cold realities, year after year. Each January at RxSS, we’re honored and humbled to provide millions more members with access to a real and reliable source of relief.