Analysis Estimates Brand-Name Drug Costs Will Continue to Rise

Brand-name prescription drug costs are likely to continue to rise, with the biggest increases seen in insulins and tumor necrosis factor (TNF) inhibitors, according to a new study published in JAMA Network Open.
Over a 6-year period, the analysis mapped out drugs cost patterns for the 49 top-selling brand-name medications in the United States based on pharmacy claims data from a health insurance database. Top selling medications were identified as drugs that exceeded $500 million in US sales or $1 billion in worldwide sales.
From January 2012 through December 2017, the researchers found a median 76% increase in costs, or a 9.6% annual compounded increase. Of the 36 drugs that have been available since 2012, 78% have seen an increase in insurer and out-of-pocket costs by more than 50% and 44%, respectively, according to the study. In total, 35% of the drugs more than doubled in costs. The authors noted that insulin products and TNF inhibitors specifically demonstrated highly correlated price increases and made up some of the largest price hikes in the industry. 
In many cases, cost increases for most of the drugs were observed 1 to 2 times per year, according to the study. Only 1 drug, hepatitis C medication ledipasvir/sofosbuvir (Harvoni), decreased in cost over time; however, the decrease was no more than 1% annually.
According to the study, the researchers estimated that costs for popular brand-name drugs would double every 7 to 8 years.
Although 17 of the study drugs had FDA-approved therapeutic equivalents, this did not appear to affect cost changes. The authors noted that this suggests prices of brand-name drugs are not largely affected by generic drugs or biosimilar products that enter the market. Additionally, competition between brand-name competitors, such as adalimumab (Humira) and etanercept (Enbrel), demonstrated some of the largest cost increases in the industry over the study period.
“Implementation of the price transparency legislation passed in October 2018 may guide patients to seek lower-priced alternatives to brand-name drugs when available, which may ultimately lead to different price trends in the future compared with the trends we observed,” the authors wrote. “However, this likelihood is unknown.”
The authors concluded that reasonable drug costs should be balanced with incentives in the pharmaceutical industry to produce innovative therapies.
“Innovative solutions, such as the Institute for Clinical and Economic Review’s value-based price benchmark, have the potential to find appropriate price points for patients while rewarding drug manufacturers that produce transformative products,” they wrote.
Topol EJ, Wineinger NE, Zhang Y, et al. Trends in prices of popular brand-name prescription drugs in the United States. JAMA Network Open. 2019. Doi: 10.1001/jamanetworkopen.2019.4791

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