Drugmakers have raised prices on nearly 1,000 medications this year
Abigail Adcox
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Pharmaceutical companies have announced price hikes on almost 1,000 drugs since the start of the year, though the increases were only moderate as the industry faces the repercussions of the Inflation Reduction Act aimed at lowering drug costs.
In January, drugmakers raised the list prices on 983 cancer, arthritis, and other prescription medications by an average of 5.6%, according to a database by 46brooklyn Research, a nonprofit organization that researches drug pricing.
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A provision in the Inflation Reduction Act that went into effect this year requires drugmakers to pay Medicare, the largest purchaser of prescription drugs, a rebate if they raise prices more than the rate of inflation. Analysts had expected to see higher price increases given the high rate of inflation, though so far, price increases appear to have been moderate.
The median price increase of 5% in 2023 was slightly above last year in January, which was 4.9%, but still lower than the 9% observed in 2016. The overall inflation rate was 6.5% for the 12 months ending in December 2022, according to the Labor Department.
David Risinger, an SVB Securities analyst, told the Wall Street Journal that drug companies may be leery of making themselves a target for politicians with high price hikes, “particularly given the lessened support in the Republican Party for the industry compared to five or 10 years ago.”
Eli Lilly and Company, Pfizer, AbbVie, and Bristol Myers Squibb were among the major pharmaceutical companies to raise prices last month. GE Healthcare announced the highest price increase of 26% for its drug Omnipaque, which is used before X-ray imaging. Last year, the Food and Drug Administration reported that Omnipaque was in short supply for six months.
Drug companies have attributed the price increases to market changes, investments in research, and the value of their medication.
Congress passed the Inflation Reduction Act last year, addressing prescription drug pricing and inflation rates. It allows Medicare to negotiate the price for some of the costliest drugs on the market. The federal government is set to unveil the first 10 drugs to negotiate maximum prices that will take effect in 2026.
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Critics of the legislation have argued it will stunt research investments and lead drug companies to launch new drugs at higher prices.