Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Usually in January, every year, a large number of pharmaceutical
companies update product prices - a trend that often receives
public attention in the media, for better or for worse. We
examined US branded drug prices last year in more detail around
that time using our IHS Markit POLI database. We found that the
average annual list price increases were dropping steadily over the
past few years, even without factoring in any additional rebates
and discounts. This year we looked again and have found
that we may be seeing this trend slowly reverse, as the average
annual price increase in January 2021 jumped 4.24% compared to a
3.39% increase the year before.
A much larger proportion of branded drugs saw price increases
between January 2020 and January 2021 (60.6%) compared to the year
before (48.0%). This was by no means a full rebound however, as it
still falls short of the average price increase in 2017-2018 of
6.92% y/y, as well as the proportion of branded drugs with price
increases that year (71.9%). Of the drugs that saw price increases
over the past year, the majority (46.3%) were under 10%, with
around 150 drugs (12.3%) recording prices increases of 10% or
higher. This suggested that both the number and proportion
of drugs with 10% or greater price increases had swelled nearly
3-fold in January 2021 relative to January 2020.
The case of outliers and pandemic drugs
We decided to have a closer look at the full manufacturer
pricing history for the drug with the most pronounced 230% price
hike in January 2021 compared to the previous year - Jaguar Health
(US)'s anti-diarrhea drug Mytesi (Crofelemer). Mytesi's substantial
price increase in May 2020 seems to have been made a few days after
the company submitted an emergency use authorization for use of its
drug to treat diarrhea in COVID-19 patients. This has prompted an
investigation by the House Oversight and Reform
committee as well as New York's Department of Financial
Services newly formed
Office of Pharmacy Benefits (OPB). There is currently no
evidence that the price increase of Mytesi was unlawful or
unjustified, however the investigations could lead to referral of
the case to "legal authorities", according to the New York
Governor's statement.
A new era… a new challenge
The proportion of drugs with 10% or higher drug price increases
has swelled in January 2021. However, outliers continue to
highlight the dangers associated with a free-pricing system. It is
often these outliers that are featured in political/advocacy
campaigns to lower or control drug prices in the US, as we saw
happening for Mytesi. Worryingly these outliers serve to speed up
the introduction of reforms to an often self-regulating system that
ebbs and flows based on various market dynamics - including public
perception as we have seen happen between 2017 and today. At the
peak of elevated public scrutiny during the Trump administration,
and without the introduction of any legislative or administrative
drug pricing policies, the pharmaceutical industry seemed to
collectively slow down price increases.
We determined in our report last year that much of the ongoing
criticism targeted against the pharmaceutical industry in recent
years was in fact misplaced. Particularly given that there was
clear evidence of rebates significantly increasing even as drug
list price increases were slowing down suggesting net prices were
in fact declining. We also found that favorable steps were already
being taken towards improving access to affordable treatments as
major firms had pledged to keep price increases within self-imposed
limits and have largely distanced themselves from firms that have
attempted to boost profits with predatory pricing. In fact,
a recent analysis we conducted found that prices for important
drugs being used off-label for COVID-19, such as azithromycin,
ciclosporin, clonazepam, and dexamethasone actually dropped in the
US on average between February 2020 and June 2020. the only
exception was one version of dexamethasone that realized a price
increase during that time. The US findings which contrast with
significant price increases for the same drugs in places like the
United Arab Emirates (UAE) and Canada, highlight the impact of
political pressure and public scrutiny on the pricing strategy in
the US. This was likely further amplified by the public health
crisis during the pandemic.
President Biden is not anticipated to shy away from attempting
to introduce pharmaceutical pricing and reimbursement reforms to
help lower drug costs for consumers. However he recently delayed
implementation of Part D rebate reforms that would have
disproportionately impacted PBMs and insurers and will likely be
reviewing all of the previous administration's pricing and
reimbursement reforms including the
Most Favored Nation (MFN) rule. Biden generally supports
allowing Medicare to directly negotiate drug prices, the
reimportation of drugs from Canada, introduction of international
reference pricing (IRP) to prevent excessive pricing, and capping
price increases to inflation rates among other measures to control
drug spending. It will be very challenging for President Biden's
administration to push through any major pricing reforms without
bipartisan support. Right now his priorities are also expected to
focus on ending the pandemic - but healthcare reform is anticipated
to follow, it is only a matter of time.
Posted 08 February 2021 by Floriane Reinaud, Director, Healthcare Research and Analysis, IHS Markit and