July 03, 2019
Figure 1: Cost of Humalog. Humalog, a form of insulin, has increased in cost by 117% from 2012 to late 2017. The cost steadily increased annually, adding up to a large increase in cost over the 5 years studied. The Y-axis shows cost per unit in USD.
Medications continue to get more expensive in the United States.
A new study looks at the average cost of 49 often-prescribed brand-name medications in the United States.
They found that for the most part, we are paying more every year for the same drugs.
The cost of most medications increased in a similar pattern at similar rates.
Furthermore, the cost of drugs in the same class increased together. For example, for diabetics, three of the most prescribed types of insulin all increased by similar amounts leaving few cheap and effective options for many diabetic patients.
Source: Trends in Prices of Popular Brand-Name Prescription Drugs in the United States
Figure 2: Percent Increase in Drug Prices from 2012-2017. Each bar is scaled to represent the percent increase in drug cost from 2012 to 2017 in the United States. Of note, the cost of the drug is not the same as the price. List prices are often much higher than the actual price paid.
By percent increase, over 35% of the top 10 most prescribed drugs had at least doubled in cost since 2012. Of note, the cost of the drug is not the same as the price. List prices are often much higher than the actual price paid.
Source: Trends in Prices of Popular Brand-Name Prescription Drugs in the United States
Figure 3: Unit Cost Increase for Commonly Prescribed Drugs. Cost per unit increased the most for biologic drugs, which are much more expensive to manufacture.
However, when we look at the absolute price increase, we can see that the cost of some drugs increased by a lot more than others as a result of costing more.
While percentage-wise, Viagra has one of the highest cost increases, it is still relatively cheap compared to Stelara, which increased in unit cost by $3,793 from 2012-2017.
The most expensive drugs tend to be in a special class called Biologics. These drugs, which are engineered from living organisms, cost a lot more to manufacture.
Biologics refer to certain types of medications that are created with components of living organisms or even living organisms themselves. Examples of these include antibodies, gene therapies, and even therapeutic viruses. In contrast, most other drugs are small molecules and chemicals that act on systems in the body.
Generic drugs are made of the same compound as brand-name drugs. However, they are not made by the original manufacturer. There is no chemical or biological difference between generic drugs and their brand name counterparts. However, they typically cost a lot less. Brand-name drugs are protected by patents that expire over time. Once these patents expire, generic manufacturers can create generic versions of these drugs at a much lower price.
Figure 4: The Cost of Stelara. Stelara, a psoriasis drug, increased the most in terms of unit cost. Stelara was already quite expensive, to begin with, with a unit cost of $5,420 in 2012. It increased to $9,213 per unit in 2017.
On a year-to-year basis, we can see that drugs of different types increase with a similar pattern.
Every year, drug manufacturers bump up the price by a little bit until the price increases by over 100% over 5 years for many of the best selling drugs.
This research provides an underlying reason for why health insurance appears to get more expensive every year. Pharmaceutical companies have been successful in raising the cost of their drugs annually.
On the other hand, pharmaceutical companies often argue that these cost increases are also drive by middlemen, such as Pharmacy Benefit Managers, who take a cut of the total cost. They also point to the fact that developing drugs has gotten more expensive.
Among adults aged 18–64 who were prescribed medication in the past 12 months, 11.4%
The percentage of people who took at least one prescription drug in the past month increased from 44 percent in 1999-2000 to 48 percent in 2007-08. Spending on prescription drugs reached $250 billion in 2009 the year studied, and accounted for 12 percent of total personal health care expenditures.
Recent big pharma trends show that the cost of drugs for common conditions such as diabetes, arthritis and cancer will continue to soar, even as Congress investigates rising costs in medicine and the systems that allow for it. In 2018, Novartis raised prices on more than 30 different classes of drugs, from 4.5 percent to 9.9 percent.
Clearvue Health is not affiliated with above organizations. The information above is provided to highlight and link to useful further reading.