'Runaway train': Drug launch prices have grown 20% annually for more than a decade, and it's time for Congress to act, researchers say

As many in the U.S. make tough financial decisions because of inflation, a new study confirms what they've likely been feeling for years: Drug prices are much, much higher than in the past.

Between 2008 and 2021, drug launch prices grew 20% annually, starting with an average of $2,115 to more than $180,000, researchers said in a new study in the Journal of the American Medical Association. From 2020 to 2021, nearly half—47%—of new drugs hit the market with prices of more than $150,000 per year.

The team—consisting of Harvard instructor of medicine Benjamin N. Rome, M.D., professor of medicine Aaron S. Kesselheim, M.D., Ph.D., and research assistant Alexander C. Egilman—looked at newly launched medicines from 2008 to 2021 in SSR Health, a drug cost database. The group looked at 548 brand-name products launched over the period and converted their price to annual costs in 2021 dollars.

While they noted that biopharma companies are indeed launching more complex biologic and rare disease drugs these days, they argued that doesn't fully account for the price growth. When factoring in drug rebates and accounting for new types of medicines hitting the market, prices still grew 11% annually, they wrote in an accompanying New York Times op-ed. 

That's far higher than the average 1% to 3% annual inflation rate for healthcare services, they pointed out.

A spokesperson for the industry trade group PhRMA took issue with the findings.

"Comparing medicines launched today and those launched a decade ago is like comparing apples to oranges," she said in an email. "Many of today’s new medicines frequently target smaller populations, including patients with rare cancers and orphan diseases. These medicines are often more complex to research and develop, and require specialized manufacturing, distribution, and administration. 

"But as we’ve seen with other so-called studies like this, these critical facts are ignored to push a political agenda that would lead to fewer new cures and treatments and less hope for patients in need," she added.

In their analysis, the researchers found that rare disease products carried a median launch price of more than $260,000 in 2021 dollars, while new oncology meds carried a median launch price of more than $155,000.

The team also looked at net prices—those after pharmaceutical rebates and discounts—for 395 of the medicines thanks to SSR's data. The researchers found that net prices were a median of 14% lower than the wholesale acquisition cost in 2008 and 24% lower in 2020. This underscores the point by some pharmaceutical industry watchers that a rebate balloon has been inflating in recent years.

In their NYT op-ed, the researchers called on Congress to act. Even though drug pricing proposals have circulated the halls of the U.S. Capitol for many years, meaningful action has been absent. The team noted that the pharmaceutical industry has lobbied "aggressively" to kill reforms it opposes.

"This time around, lawmakers cannot ignore the fact that prices for new drugs are rising by 20 percent each year," they wrote in the NYT. "Allowing Medicare to negotiate prices for newly marketed drugs would apply the brakes to this runaway train."