Drug manufacturers may change the list prices of their drugs at any time after launch. Over the period from January 2022 to January 2023, more than 4,200 drug products had price increases, of which 46 percent were larger than the rate of inflation. The average drug price increase over the course of the period was 15.2 percent, which translates to $590 per drug product.
- High prescription drug prices create affordability challenges for patients, health care payers, employers, and taxpayers. Increases over time in prices for existing drugs have added to these challenges.
- The Inflation Reduction Act (IRA) requires manufacturers to pay rebates to Medicare if they raise their prices for certain Medicare Part B and D drugs faster than the rate of inflation.
- Most drug manufacturers make changes to their prescription drug list prices in either January or July of each year, with the greatest number of changes taking place in January. From January 2022 to January 2023, price changes ranged from a decrease of 99 percent to increases of over 3,000 percent. Over this period, 4,264 drug products had price increases. Of these increases, 1,982 (46 percent) were greater than the increase in the consumer price index for all urban consumers (CPI-U) for this period (which was 6.4 percent). During the same period, 1,599 drug products had price decreases.
- For those drugs with a price increase, the average increase over the January 2022 to January 2023 period was 15.2 percent. This is higher than the average price change between 2021 and 2022 of 11.5 percent. Because which drugs change price can vary considerably from year to year, the dollar values of the increases can be very different. The January 2022 to January 2023 increase of 15.2 percent translates to $590, while the previous year’s increase of 11.5 percent translates to $172.
- Percentage price increases for multi-source drugs tend to be higher than for single source drugs, while the absolute dollar increases are much larger for the latter. From January 2022 to January 2023, the average price change for single source drugs was 7.4 percent ($958) while the average increase for multi-source drugs was 26.0 percent ($69).
- The highest dollar value increase in 2022 was for a drug approved to treat spinal muscular atrophy, whose price increased from $2.12 million per kit to $2.18 million, reflecting a $63,750 (3 percent) increase. The highest percentage increase was for a drug approved to treat high blood pressure whose price increased more than 35-fold, from a list price of $4.32 to a new price of $158.72.
- The list prices for drugs included in this brief are determined based on Wholesale Acquisition Cost (WAC). While these results provide insights into the potential impacts of the IRA’s inflation rebates, they are not direct estimates of which drugs will be subject to the IRA provisions, due to differences in price measures, time periods, and definition of drug products between our data source and the IRA provision.
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