As pharmaceutical companies raise prices on over 250 brand-name drugs in 2023, concerns about affordability and access to medication continue to grow.
At a Glance
- Over 250 pharmaceutical products have seen price increases in 2023
- Most price hikes are under 10%, with a median increase of 4.5%
- The Inflation Reduction Act aims to limit Medicare drug price increases
- Drug shortages in 2023 were the highest in a decade
- Nearly 30% of Americans have not taken prescribed medication due to high costs
Rising Costs and Their Impact
The pharmaceutical industry is once again under scrutiny as companies implement widespread price increases on brand-name drugs. This trend is raising concerns about the affordability of essential medications for millions of Americans. According to recent reports, over 250 pharmaceutical products have had their prices hiked in 2023, with industry leaders such as Pfizer, Bristol Myers Squibb, and Sanofi at the forefront of these changes.
While most price increases have remained below the 10% threshold, with a median increase of 4.5%, the cumulative effect on patients and the healthcare system is significant. Pfizer alone has raised prices on more than 60 drugs, including popular medications like Paxlovid, Nurtec, and Ibrance. Bristol Myers Squibb has also joined the trend, increasing prices on cancer cell therapies Abecma and Breyanzi by 6% and 9%, respectively.
ICYMI: #BigPharma’s egregious price hikes outpacing inflation this quarter will impact more than 750K seniors who rely on Medicare Part B drugs.
Lawmakers must hold Big Pharma accountable for their egregious price hikes.https://t.co/SySPNX6PTw
— CSRxP (@RxPricing) December 15, 2023
Inflation Reduction Act and Its Limitations
The Inflation Reduction Act of 2022 was introduced as a measure to curb excessive drug price increases, particularly for Medicare beneficiaries. The Act aims to limit Medicare drug price increases to the inflation rate and allows Medicare to negotiate prices for certain medications. However, these protections do not extend to the commercial market, leaving over 176 million Americans vulnerable to potential price hikes.
“Weighted average price paid to a manufacturer by wholesalers for sales of the drug to retail community pharmacies, as well as such pharmacies that purchase drugs directly from manufacturers,” CMS said.
The Center for American Progress found that in July 2023, drug companies raised list prices above the 3% inflation rate for 112 drugs, with a median price increase of 3.9%. This increase is 30% higher than the inflation rate, highlighting the ongoing challenge of maintaining affordable access to medications despite legislative efforts.
Impact on Patient Care and Hospital Operations
The rising costs of pharmaceuticals are having a profound impact on patient care and hospital operations. Bharath Krishnamurthy, Director of Health Analytics & Policy, and Megha Parikh, Associate Director of Health Analytics and Policy, stated, “Nearly 30% of Americans say they haven’t taken their medication as prescribed due to high drug prices, and it is estimated that more than 1.1 million Medicare patients alone could die over the next decade because they cannot afford to pay for their prescribed medications.”
This alarming statistic underscores the critical need for addressing the issue of drug affordability. Hospitals are also feeling the strain, as high drug costs and shortages affect their ability to provide services and maintain adequate staffing and supplies. The situation is further complicated by the fact that 2023 saw the highest number of drug shortages in a decade, with an average of 301 drugs in shortage per quarter.
“More than 99% of hospital and health system pharmacists reported experiencing drug shortages in 2023, with 85% of respondents describing the severity of drug shortages as critically or moderately impactful,” Krishnamurthy and Parikh added.
The combination of rising drug prices and shortages is creating an unsustainable situation for hospitals, stretching their resources and potentially compromising patient access to essential care. Managing drug shortages alone can add up to 20% to hospitals’ drug expenses due to the additional resources needed for procurement and administration.
