Why drug prices keep going up

Alia Paavola - Print  | 

Price hikes on existing drugs and new medications coming to market are the primary contributors to rising prescription drug prices, a new study published in Health Affairs reveals.

For the study, researchers analyzed pricing data from First Databank and the UPMC Health Plan.

Here are five findings:

1. For the last 10 years, annual increases in drug costs have exceeded general inflation. Between 2013 and 2015, prices rose by nearly 10 percent,  six times the rate of general inflation.

2. The study found the increase in brand-name drugs was largely attributed to increases in existing drugs prices, such as insulin. Between 2008 and 2016, the cost of oral brand-name outpatient drugs rose 9.2 percent, and injectable brand-name drug prices rose 15.1 percent.

3. Higher costs for specialty drugs were largely due to the higher prices of newer treatments, not existing ones. The cost of oral specialty medications rose 20.6 percent, and injectable specialty meds increased 12.5 percent from 2008 to 2016. Of the oral specialty medication price hikes, 71.1 percent were attributed to new drugs. Similarly, 52.4 percent of specialty injectable treatment cost increases were attributed to new drugs.

4. The costs of oral and injectable generic medications rose by 4.4 percent and 7.3 percent respectively. The study found the increase in generic prices was a result of new generics entering the market as brand-name drugs lost their patents.

5. "We found that increases in the costs of specialty and generic drugs were driven by the entry of new drug products, but rising costs of brand-name drugs were largely due to inflation in existing medication prices," the authors concluded.

Read the full study here.

More articles on pharmacy:
Hospital-owned drug company attracts 12 more health systems
How nurses are becoming integral to pharma marketing: 7 notes
4 tips for managing drug spend from Alameda Health System's Dr. Yi-Chih Peng

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