2020 is three days old and drug prices are already jumping
Pharmaceutical firms are making it hard for President Donald Trump to fulfill his promise to address runaway prescription drug prices. Three days into the new year, drugmakers have already increased the list prices on hundreds of medications, with experts predicting more hikes in the weeks to come.
So far in 2020, prices on 411 drugs have increased an average of 5%, according to GoodRx, which tracks the cost of more than 3,500 drugs. Of the drugs that have seen rising prices, 407 were brand-name products and four were generic.
The drug with the biggest cost increase so far this year: Neos Therapeutics' Cotempla XR, a stimulant used to treat ADHD and narcolepsy, whose list price is up more than 13%. Other commonly prescribed drugs that are getting pricier include Eliquis (up 6%), often prescribed to prevent blood clots, and Humira (7.4%), used to treat inflammation in patients with autoimmune disease.
Drug prices are much higher in the U.S. than in other wealthy countries, where governments typically negotiate with manufacturers to control costs.
The Trump Administration last month announced a proposal to import prescription drugs from Canada in an effort to lower costs for consumers. But political barriers could sideline the plan, including opposition from the Canadian government and drug companies.
Still, experts commended the policy's goal of reducing drug costs in the U.S., where 1 in 8 individuals can't afford the heart disease medication they need to stay alive.
Business as usual
The January jump in drug costs is no surprise, with many businesses hiking prices early in the year. Last January, drugmakers raised prices on 486 brand-name drugs by an average of 5.2%. In 2018, 580 brand drugs increased by an average of 8%. Virtually all of those hikes occurred in the first five days of the month, according to GoodRx.
That could change this year as more pharmaceutical firms delay pushing up prices until later in January, perhaps to avoid scrutiny given the heated political debate around prescription drug costs.
"Obviously, 2019 was a year of tremendous political pressure on drug companies and there was a lot of anticipation Washington was going to do something, so it makes sense they might be more sensitive to coverage or perceptions on their price hikes," said Thomas Goetz, head of research at GoodRx.
Price hikes will hit consumers
Consumers typically don't take a direct hit when the list price on prescription drugs rise, with Goetz noting that insurance companies absorb the bulk of the costs. Still, the expenses trickle down to consumers in other ways.
Insurers can opt to cover fewer drugs, for example, curbing patient access to expensive brand-name drugs. "They become more restrictive with the list of drugs they cover," he said.
Firms also can make consumers jump through hoops to access those drugs that are covered by insurance. Patients are often required to obtain prior authorization before their insurer agrees to pay for a drug, which can be discouraging. Patients responsible for coinsurance — a percentage of a drug's cost rather than a fixed amount — are also hit hard by increases in drugs' list prices.
"If you pay 10% of a $4,000 drug and that drug goes up 5% or 10% that's a meaningful increase," Goetz said.
