News Briefs: Launch Prices Grew Dramatically in Recent Years

Between 2008 and 2021, drug launch prices increased by 20% per year, according to new research published in JAMA. In 2020 and 2021, prices rose 11% each year, even after adjusting for manufacturer discounts. In addition, nearly half of all drugs launched in the last two years initially cost at least $150,000 per year. “Rising brand-name drug prices often translate to payers restricting access, raising premiums, or imposing unaffordable out-of-pocket costs for patients,” the study’s authors observed.

An opinion article published in the New England Journal of Medicine argued that the 340B drug program creates “perverse incentives” for preexposure prophylaxis (PrEP) medications that prevent HIV infection by encouraging safety-net clinics to prescribe the most expensive PrEP treatments. The article observes that “insurers reimburse 340B clinics for medications at an amount close to their list price; the difference between the list price and the discounted 340B price results in revenue — known as the ‘340B spread’ — that clinics can allocate toward other health services. The higher the drug’s price, the bigger the spread….The high cost of PrEP medications has made 340B central to the ability of some safety-net clinics…to provide HIV-prevention and other services….Brand-name oral medications for PrEP, Descovy and Truvada… produc[e] a spread of as much as $1,600 per patient per month. That revenue can fund…important services provided by 340B clinics.” That results in “costs to the health care system that far exceed the clinical benefits.”

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• RADAR on Drug Benefits