Drug Makers Start 2023 With Price Hikes

The median wholesale acquisition cost (WAC) for brand drugs jumped 5% so far in January, and pharma manufacturers have raised prices on about 450 medications, according to early data from 46brooklyn Research.

Antonio Ciaccia

“It is definitely too early to make any broad statements about how 2023 compares with prior years, as there is just so much more activity that we expect to see before the end of the month,” Antonio Ciaccia, chief executive officer of 46brooklyn, told Formulary Watch. The 450 price increases so far in January account for around a quarter of the total number of increases that Ciaccia expects to see throughout 2023.

So far, however, overall brand drug prices have increased at a slower rate than last year. The weighted overall average WAC price increase for all drugs based on Medicaid utilization so far in 2023 is only 1.3%, compared with a 5.1% increase in 2022.

In 2022, the median price increase was 4.9% and around 1,400 medications had a price hike, according to 46brooklyn, nonprofit drug pricing research and education firm started by the founders of 3 Axis Advisors.

According to 46brooklyn, the biggest list price percentage increase this month was 26.8% for GE Healthcare’s Omnipaque (iohexol) solution, an oral contrast medium. The biggest decline was a 70.2% drop in the list price of Amneal’s Lyvispah (baclofen), which is used to treat muscle stiffness and pain in people with multiple sclerosis.

“While it’s tough to pinpoint exact reasons for these types of swings, we know that Omnipaque has had a number of supply challenges over the past year,” Ciaccia said. “In the face of increased demand amid a prolonged period of shortages, it doesn't surprise me that prices go up in an effort to fill the void.”

While it’s not the largest price increase, the 5.9% list price hike on Gilead’s HIV therapy Biktarvy (bictegravir, emtricitabine, and tenofovir alafenamide) could have the biggest impact this year — if the rebates and discounts offered by Gilead don’t keep pace with the list price increases, Ciaccia said. "A highly used drug like Biktarvy had more than $500 million in gross Medicaid spend in 2022 and more than $1.7 billion in gross Medicare spend in 2020,” he said.

The other increases on major medications so far include a 6% increase on Pfizer’s Xeljanz (tofacitinib) for rheumatoid arthritis and other autoimmune conditions, and a 7.9% hike on the company’s Ibrance (palbociclib) and Xalkori (crizotinib) to treat cancer.

In addition, Bristol Myers Squibb’s CAR T-cell therapies Abecma (idecabtagene vicleucel) and Breyanzi (lisocabtagene maraleucel) — already priced high compared with other medications — both had a price hike of 9% this month. The price increase, however, is the first since launch in the first quarter of 2021 for both therapies, “bringing them to list prices comparable with other available CAR-T therapies in the market,” a BMS spokesperson told Formulary Watch.

“There were several driving factors in this decision, including the continued clinical investment, the value of these innovative therapies, the rate of inflation, and the sophisticated, personalized nature of the CAR T manufacturing process,” the spokesperson said.

Across the company’s portfolio, BMS expects U.S. net prices — which reflect discounts, rebates, and other price concessions — to remain largely flat in 2023, the spokesperson said. “Any list price increases apply to medicines with ongoing clinical research and reflect our ongoing efforts to responsibly price our medicines while balancing economic factors, including inflation and investment in new innovation.”

For the last five years, BMS has not increased list prices by more than 6% annually across its portfolio of medicines with ongoing clinical research, with the exception of its CART portfolio, the spokesperson noted. “The complexity of delivering CAR T-cell therapies is unlike any other traditional biologic or small molecule medicine, using a patient’s own cells to start a highly sophisticated and personalized manufacturing process. Creating a personalized therapy for each patient has been incrementally impacted by inflation and other direct and indirect costs.”

A Pfizer spokesperson said the company has adjusted the average list prices of all of its medicines and vaccines in 2023 around 3.6%, which is below overall inflation. “The modest increase is necessary to support investments that allow us to continue to discover and deliver new medicines as well as address increased costs throughout our business,” the spokesperson said.

“For the past four years, our net prices — the prices we actually receive for our medications — have fallen due to higher rebates and discounts paid to insurance companies and pharmacy benefit managers,” the Pfizer spokesperson said. “Any increase in patient costs is likely the result of increased cost-sharing, through co-insurance or deductibles, or increased use. Pfizer is dedicated to growing through expanded use of our medicines (demand), not price increases.”

Ciaccia cautions that WAC data does not tell the whole pricing story. “The list prices we’re examining are really the surface layer of drug pricing, and while certainly important, there is so much more to our exposure to the costs of medicines,” he noted. “The ambiguity of the actual costs of medicines is what enables the entire drug distribution channel to harvest hidden markups on prescription drug claims at the expense of plan sponsors, taxpayers, and patients. This opacity further obfuscates our ability to determine the actual value a medicine provides. The inability to objectively determine what a fair price should be for the products and services offered by drug channel participants hinders the ability for true market forces to pressure margins and promote quality and efficiency as we seek to balance drug accessibility with affordability.”