Net prices of drugs have jumped 60% since 2007
The prices of prescription drugs have risen 60% over an 11-year period, according to a new study published in JAMA.
Using data from 2007 to 2018, researchers from the University of Pittsburgh analyzed pricing data of 602 drugs. Over the 11-year period, net prices of the drugs rose 60%, or 4.5% per year. List prices increased 159%, or 9.1% annually.
The highest increases in list prices were in 2012 (13%), 2013 (12%) and 2014 (17%), though they started slowing again in 2015.
At the same time, discounts rose sharply, from 40% to 76% in Medicaid and from 23% to 51% for other payers. The discounts offset 62% of the increase in list prices, researchers found. These discounts are typically negotiated by payers and drug companies, with payers leveraging discounts for competition.
“While the findings of this study demonstrate that rebates and discounts may have an important role in offsetting increases in list prices of drugs, discounting practices can have unintended, and unfavorable, consequences,” first author Immaculada Hernandex, PharmD, PhD, of the University of Pittsburgh, et al. wrote.
These consequences include discounts that aren’t directly passed onto the consumer or patient, and uninsured people not being able to receive these negotiated discounts.
“Thus, the widening gap between list and net prices may exacerbate disparities in medication access between insured and uninsured or underinsured patients,” the authors wrote.
Additionally, the rebate/discount system between pharma and insurers creates complexity without value.
Knowing more about the changes in list and net prices is critical for policy implications, researchers noted, stating that pharmaceutical companies have previously point to lower net price increases as list prices rose.
The authors noted several limitations of the study, including only analyzing branded products of publicly listed companies, using price estimates of the reported data and a lack of peer-reviewed validations of the data sourced used.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."