Two new HHS reports illustrate the potential positive impact of the Inflation Reduction Act on lowering prescription drug prices.
According to a Sept. 30 news release, the Price Increases for Prescription Drugs and Trends in Prescription Drug Spending reports track rising drug costs from 2016 to 2022, providing information on how Medicare beneficiaries gain a measure of protection against rising drug prices.
"In recent years, prescription drug prices have skyrocketed, but thanks to the Inflation Reduction Act, America’s families will soon start seeing relief," said HHS Secretary Xavier Becerra.
High prescription drug prices cause affordability challenges for patients and healthcare systems. The report notes that most prescription drug prices increase yearly in January or July. A newly introduced requirement designed to reduce the frequency and size of drug price increases calls for manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation, beginning Oct. 1.
Price Increases for Prescription Drugs, 2016-2022 report key findings:
- In January 2022, the average list price increase was nearly $150 or 10 percent per drug. In July 2022, it was $250 or 7.8 percent per drug.
- The list price for several drugs increased by more than $20,000, or 500 percent.
- 1,216 products had price increases during the 12-month period from July 2021 to July 2022, exceeding the inflation rate of 8.5 percent for that time period. The average price increase for these drugs was 31.6 percent.
The Inflation Reduction Act includes several provisions to address drug pricing, including allowing the HHS Secretary to negotiate prices in Medicare Parts B and D for selected medications and introducing Medicare rebates for drug prices that rise faster than inflation. These provisions may impact future drug spending trends, according to the report.
Trends in Prescription Drug Spending, 2016-2021 report key findings:
- In 2021 the U.S. healthcare system spent $603 billion on prescription drugs before accounting for rebates, of which $421 billion was on retail drugs.
- Spending on drugs was largely due to growth in spending per prescription rather than increased utilization.
- Drug spending is heavily driven by a relatively small number of high-cost products.
- The cost of specialty drugs has grown, totaling $301 billion in 2021, an increase of 43 percent since 2016.
- Specialty drugs represented 50 percent of total drug spending in 2021.