US Drug Prices Rise in 'Highly Synchronized' Pattern, Study Finds

Kerry Dooley Young

May 31, 2019

The costs for certain widely used medicines continue to rise in the United States even amid competition from similar products, according to a new study. The results run contrary to normal expectations about market forces on prices.

"That was one of the more disheartening findings" of the study, lead author Nathan E. Wineinger, PhD, from Scripps Research in La Jolla, California, told Medscape Medical News.

In an article published today in JAMA Network Open, Wineinger and his coauthors said they found "highly synchronized" relative cost changes for blockbuster drugs in well-established categories: insulin for diabetes and tumor necrosis factor inhibitors for rheumatoid arthritis.

The median monthly cost of the rheumatoid arthritis drug adalimumab (Humira, AbbVie) rose 124%, from $1940 in January 2012 to $4338 in December 2017, while the cost of a similar drug etanercept (Enbrel, Pfizer), increased 133%, from $1862 to $4334 in the same period.

Meanwhile, the monthly cost of two fast-acting forms of insulin also more than doubled between 2012 and 2017. The median total monthly cost for Humalog from Eli Lilly rose from $126 to $274, while that of NovoLog from Novo Nordisk rose from $244 to $532.

"Such seeming coordination coinciding with high price increases is particularly worrisome," Wineinger and colleagues write.

These price increases continued well after the drugs reached the market.

Two of the initial Food and Drug Administration (FDA) approvals for these drugs date to the 20th century; Humalog in 1996 and Enbrel in 1998. The FDA then approved NovoLog in 2000 and Humira in 2002, according to the agency's website.

The pattern of persistently rising costs for well-established products was seen with other products in the study, the researchers said. Of the 36 drugs studied that have been available since 2012, 28 (78%) showed an increase in insurer and out-of-pocket costs of more than 50%. Sixteen (44%) of these medicines have more than doubled in price.

"[W]e did not find evidence that products that entered the market 3 to 6 years ago have different trends compared with other drugs in the first years of availability. This finding, along with the consistent, once- or twice-a-year price increases of most drugs we examined, implies that this cycle will persist throughout the lifetime of a drug in the current, private pharmaceutical insurance market," the authors write.

Wineinger and his coauthors focused on 49 top-selling branded drugs, restricting their analysis to drugs that exceeded $500 million in US sales or $1 billion in worldwide sales. They used Blue Cross Blue Shield pharmacy claims data from January 1, 2012, through December 31, 2017.

They note that a limitation of their analysis is the lack of information on how rebates affect net pharmaceutical prices. About 16% of spending by private insurers on branded drugs was returned as rebates in 2016, according to previous data. Yet there is variation in how these discounts are applied, depending on the drug and insurer. Moreover, the rebates cannot be linked to individual claims, Wineinger and colleagues write.

To address the lack of rebate data, they obtained third-party estimates of net price data of drugs. They said they observed high correlation between increases in the rates of insurer and out-of-pocket costs paid for each drug and the net prices.

"This association suggests that the offered supposition that higher list prices and greater reliance on rebates reduce costs may be untrue," Wineinger and colleagues write. "Instead, increases in list prices, and thus increases in insurer and out-of-pocket costs paid, may coincide with increases in net prices, which in turn make these drugs more expensive overall."

Complaints about the seeming murkiness of rebates are common in health policy discussions. Even members of Congress and their staffers are puzzled about the flow of discounts among middlemen known as pharmacy benefit managers, insurers, and patients who purchase medicines.

The Trump administration in January unveiled a plan to allow discounts on prescription medicines to flow more directly to patients in the Medicare Part D pharmacy program, while disrupting the flow of rebates that drug makers now pay to so-called middlemen.

More than 25,000 comments were submitted on the proposal. Drug makers were generally supportive. But opponents say it will be a windfall for the pharmaceutical industry and increase the cost of healthcare.

In a comment on the proposal, the trade group America's Health Insurance Plans said it would raise premiums paid for Medicare Part D plans, while allowing "a small percentage of Medicare patients may get some limited relief at the pharmacy counter."

The rebate proposal is part of the Trump administration's efforts to rein in rising drug prices. It remains uncertain how much of this rebate plan may eventually take effect.

Still, there's been bipartisan agreement in Congress about at least a need to consider ways to help more Americans afford their medicine.

In their new article, Wineinger and coauthors note a need to balance this affordability for consumers against the financial "incentives in the pharmaceutical industry to produce innovative drugs that improve and save lives."

They suggest looking toward methods that would peg payments to the level of benefits medicines bring to patients.

"Innovative solutions, such as the Institute for Clinical and Economic Review's value-based price benchmark, have the potential to find appropriate price points for patients while rewarding drug manufacturers that produce transformative products," Wineinger and colleagues write.

This study was funded by UL1 TR002550 Clinical and Translational Science Award from the National Institutes of Health National Center for Advancing Translational Sciences. One of the authors, Eric Topol, MD, reported personal fees from Blue Cross Blue Shield outside of the submitted work. Topol is editor-in-chief of Medscape.

JAMA Network Open. Published online May 31, 2019. Full text.

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