Costlier drugs hit hard in US

Prices have risen on almost 1,000 drugs in the United States in the first three weeks of January, the most increases in January since at least 2011, according to a nonprofit organization that tracks drug prices.

The price increases on 985 drugs ranged from 1 to 26 percent, with median increases of 5 percent, data from nonprofit 46brooklyn Research showed.

The affordability of drugs has been a major concern in the US. A poll conducted by the nonprofit Kaiser Family Foundation last October showed that 60 percent of people in the US are taking at least one prescription drug, and about 30 percent of those patients said they have not taken their medication as prescribed due to costs.

Those patients reported that they tried to cut costs by not filling the prescription, using over-the-counter drugs as alternatives or reducing dosages.

Industry analysts said it is too early to tell whether the price increases were influenced by a new federal law requiring drug companies to pay Medicare, a federal health insurance program, a rebate if they increase prices above the rate of inflation, USA Today reported.

"Inflation has been running higher than recent historical trends," Ryan Urgo, managing director of health policy at health consulting firm Avalere, told the newspaper. "This may certainly create opportunities for manufacturers to raise list prices higher in percentage terms than in the past, given that this could be done without triggering a rebate penalty."

Another new law, as part of the Inflation Reduction Act passed by Congress last year, will allow Medicare to bargain with drug companies on the prices of 10 of the highest-priced drugs in 2026 before adding 15 more in 2027, 15 more in 2028 and 20 more each year after that.

Lack of alternatives

The government will be able to negotiate the prices of drugs that have been on the market for nine years, or that have been available for 13 years if there are no generics or other comparable alternatives.

If the policy were in place from 2018 to 2020 for 40 drugs, it would have saved the US $26.5 billion — about 5 percent of all spending on drugs, according to researchers from Brigham and Women's Hospital and Harvard Medical School in Boston.

The experts predicted that drugmakers will likely launch new drugs with more expensive prices before Medicare can bargain for more affordable prices, a trend that has lasted for more than a decade.

A study by the Journal of the American Medical Association found that between 2008 and 2021, the median launch price for new drugs increased from about $2,000 each year to $180,000, or about 20 percent a year. The growing power of middlemen — pharmacy benefit managers — also plays a role in drug price increases.