Prices of nearly 1,000 drugs in US rise in January

In the first three weeks of January, prices have risen on almost 1,000 drugs in the US, the most increases in January since at least 2011, according to a nonprofit organization that tracks drug prices.

The price increases on 985 drugs ranged from 1 percent to 26 percent, with median increases of 5 percent, according to data from 46brooklyn, a nonprofit organization.

Affordability of drugs has been a major concern in the US. A poll conducted by nonprofit KFF (Kaiser Family Foundation) last October showed that 60 percent of Americans are taking at least one prescription drug, and about 30 percent of those patients said that they haven't taken their medicine as prescribed due to costs.

Those patients reported that they tried to cut the cost by not filling the prescription, using over-the-counter drugs as alternatives or reducing dosages.

Industry analysts said it is too early to tell whether the price increases were influenced by a new federal law requiring drug companies to pay Medicare a rebate if they increase prices above the rate of inflation, USA Today reported.

"Inflation has been running higher than recent historical trends," Ryan Urgo, managing director of health policy at health consulting firm Avalere, told the newspaper. "This may certainly create opportunities for manufacturers to raise list prices higher in percentage terms than in the past, given that this could be done without triggering a rebate penalty."

Another new law, as part of the Inflation Reduction Act passed by Congress last year, will allow Medicare to bargain with drug companies on the prices of 10 of the highest-priced drugs in 2026 before adding 15 more in 2027, 15 more in 2028 and 20 more each year after that.

The government will be able to negotiate the prices of drugs that have been on the market for nine years or that have been available for 13 years if there are no generics or other comparable alternatives.

If such policy were in place from 2018 to 2020 for 40 drugs, it would have saved the US $26.5 billion, about 5 percent of all spending on drugs, according to researchers from Brigham and Women's Hospital and Harvard Medical School in Boston.

The experts predicted that drugmakers likely will launch new drugs with more expensive prices before Medicare can bargain for more affordable prices, a trend that has lasted for more than a decade.

A study by the Journal of the American Medical Association (JAMA) found that between 2008-21, the median launch price for new drugs has increased from about $2,000 each year to $180,000, or about 20 percent a year.

The growing power of middlemen called pharmacy benefit managers also plays a role in the drug-price increases. They influence whether a drug gets on an insurance plan. In exchange, the managers demand concessions from drug companies in the form of rebates or drug discounts.

However, insurance companies and pharmacy benefit managers often don't pass rebates and discounts on to consumers, according to the Pharmaceutical Research and Manufacturers of America (PhRMA).

Drug companies also raise prices to offset discounted drug programs such as Medicaid, the federal government program for low-income families.

"More than half of what's spent on medicines goes to entities that don't make the medicines," Priscilla VanderVeer, a PhRMA spokesperson, told USA Today.

"These entities, including insurance companies and middlemen like pharmacy benefit managers, are profiting at the expense of patients.''