New medicine prices go over the top in US

New drugs are being introduced in the US market at over-the-top prices. In November, regulators in the United States approved the most expensive drug in the world. CSL's Hemgenix, a gene therapy for the blood-clotting disorder hemophilia B, made its debut with a list price of $3.5 million for one treatment.

In January, the US approved two new drugs for cancer treatment — Jaypirca by Eli Lilly and Company for mantle cell lymphoma, and Orserdu by Stemline Therapeutics for breast cancer. Both drugs cost a minimum of $21,000 per month, which adds up to more than $250,000 for a full year of treatment.

Last year, the median annual price of new drugs was $222,003, Reuters reported. In 2021, the median annual price was $180,000 for 30 drugs first marketed through mid-July, according to a study published recently in the Journal of the American Medical Association, or JAMA.

The JAMA research found that from 2008 to 2021, launch prices for new drugs increased exponentially by 20 percent per year. The research also found that nearly half, or 47 percent, of the drugs that were approved for use between 2020 and 2021 had a yearly price of $150,000 or more, while only 9 percent of drugs approved between 2008 and 2013 had similar high prices.

"I don't see anything changing that trend," Aaron Kesselheim, professor of medicine at Harvard Medical School who co-authored the JAMA study, told Reuters.

It is not just new drugs that are expensive. Prescription drugs usually tend to be more expensive in the US than in other countries.

Harvoni, a drug used to treat hepatitis C, cost an average of $30,808 for a 28-day supply in the US. However, the same prescription was found to cost significantly less in other countries, costing $4,944 in Chile and $14,720 in Switzerland, according to a 2019 survey by the Health Care Cost Institute and the International Federation of Health Plans.

Nearly 1 in 3 people in the country said they have not taken their medication as prescribed due to cost, according to a poll by Kaiser Family Foundation last year.

US Congress last year passed the Inflation Reduction Act, which aims to curb drug costs by requiring drugmakers to pay rebates to the federal Medicare program if certain drug price increases surpass the overall inflation rate. It also provides the Medicare agency with the power to bargain for prices on specific drugs years after they have been introduced.

However, the new law does not limit what drugmakers can charge for new medications.

"It will put pressure on you to launch prices at higher levels to give you increased bandwidth in years further down the line when you are not able to put your foot fully on the gas," Antonio Ciaccia, CEO of nonprofit 46brooklyn Research which analyzes drug price data, told The Wall Street Journal.

Unlike some other developed countries, the US does not regulate the initial prices of new drugs.

"There is nothing restricting manufacturers from charging as high a price as the market will bear," Benjamin Rome, an instructor of medicine at Harvard Medical School who co-authored JAMA's drug price research, told The Wall Street Journal. "And as a result, the manufacturers can continue to charge higher prices, as long as you have new products."

A recent analysis from Democratic Representative Katie Porter found that the average annual cost of a newly introduced cancer drug in the US in 2021 was $283,000, a 53 percent increase from 2017.

Another reason contributing to high launch prices is the drug industry's growing emphasis on creating new drugs for rare diseases with a limited number of patients, such as certain cancers and genetic disorders, The Wall Street Journal reported.