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Drugmakers Launch New Medicines at Record-high Prices in 2022

Drugmakers are introducing new medicines at record-high prices, according to a new analysis from Reuters. The median annual price of 13 new drugs the U.S. Food and Drug Administration approved to treat chronic conditions is $257,000, with eight of the newly launched drugs priced at more than $200,000.

By comparison, the median annual price for the first 30 drugs marketed through mid-July 2021 was $180,000, according to a recent Journal of the American Medical Association (JAMA) study. Since 2008, the study shows drug launch prices have skyrocketed by more than 8,400%.

Reuters’ analysis regarding record-high drug prices comes in the wake of the recently passed Inflation Reduction Act, which includes several provisions intended to reduce prescription drug prices. While this legislation does not limit what drugmakers can charge for new drugs, it allows the federal health secretary to negotiate the prices of certain expensive drugs annually for Medicare and requires pharmaceutical companies to issue rebates if they raise drug prices beyond the rate of inflation.

Some experts believe drug manufacturers may rely more on high drug launch prices moving forward. The JAMA study revealed that drug launch prices increased from an average of $2,115 per year in 2008 to $180,000 per year in 2021. In that same time period, drug launch prices grew by 20% annually. The pharmaceutical industry stated that prices for these new drugs reflect their value to patients, as many treat rare diseases for which there are no other treatments. Drugmakers stressed that they do not determine what patients ultimately pay for their medications.

What Rising Drug Prices Mean for Employers

High drug prices are financially toxic for American workers. Employees who have experienced spikes in their out-of-pocket expenses are almost twice as likely not to fill a prescription or forgo medical treatments or tests, furthering the complications of their medical conditions. Pharmaceutical companies have attributed high prices to innovation, arguing that new and improved drugs are naturally more expensive. However, a lack of improved medical outcomes in the U.S. underscores how many pharmacy benefit managers (PBMs) are not operating in people's best interests.

For many employers, combating rising health care costs and improving employee wellbeing are two of the most pressing concerns. As costs continue to rise at unsustainable levels, employers must consider implementing effective strategies to reign in medical spending and address high prescription drug costs. Self-funded employers rely on their pharmacy benefit manager to reduce pharmacy costs and enhance patient outcomes; however, the pharmaceutical industry has largely come under the same scrutiny as the drugmakers. Leveraging pharmacy benefit consulting expertise is one of the best approaches to ensure you are evaluating and implementing the best strategy for your organization.

For more information on managing high prescription drug costs, watch: Uncovering the Truth Behind Your Rising Pharmacy Benefit Spend.