Drug companies raised the prices on hundreds of medications on Jan. 1, with most prices up 5% to 6% on average.

Why it matters: The start of the new year is the most popular time for drug companies to hike prices, and even though high drug prices remain one of the biggest political health care issues, increases in 2022 are tracking in line with other recent years.

By the numbers: Pharmaceutical companies increased prices on 460 drugs on Jan. 1, according to drug prices monitored by research firm 46brooklyn.

• The number of drugs that had price increases on Jan. 1 of prior years according to 46brooklyn: 629 (2021), 385 (2020), 359 (2019), 538 (2018) and 494 (2017).
• Many drugmakers implement price hikes on other days throughout January, so expect more increases in the coming days.

Between the lines: Several blockbuster drugs were included in this initial batch of 2022 price hikes.

• Gilead: ⬆️ 5.6% on HIV drugs Biktarvy and Descovy.
• Pfizer: ⬆️ 6.9% on breast cancer drug Ibrance, ⬆️ 6.9% on its Prevnar vaccine and ⬆️ 4.4% on the costly heart drugs Vyndamax and Vyndaqel.
• Purdue: ⬆️ 5% on opioid poster child OxyContin.
• Vertex: ⬆️ 4.9% on Trikafta, a blockbuster cystic fibrosis medication that has no competitors and already has a list price of more than $311,000 per year.

Yes, but: These actions affect the drugs’ list prices. Pharmacy benefit managers negotiate lower drug prices in the form of rebates, so drugmakers often collect lower net prices.

• However, list prices still matter because they are what the uninsured pay, and deductibles and coinsurance rates are often based on a drug’s list price.
• Drug companies also capture most or all of a list price increase for patented drugs that have little competition, like those mentioned above.

What they’re saying: “We expect net prices to continue to decline due to increased rebates and discounts,” a Gilead spokesperson said in response to the company’s price hikes. The spokesperson did not answer specific questions about the rebates for those drugs.

• “The modest increase is necessary to support investments that allow us to continue to discover new medicines and deliver those breakthroughs to the patients who need them,” a Pfizer spokesperson said. When posed specific questions about Ibrance’s rebates, the spokesperson said: “We do not disclose detail at the product-level.”
• Vertex’s price increases on Trikafta and its other cystic fibrosis drugs “are the first price increases for a Vertex medicine since 2017, and the first ever for … Trikafta, and they “reflect the significant value these medicines bring to patients.” Vertex similarly did not respond to questions about rebates.

Our thought bubble: List price increases don’t tell the entire story about U.S. drug pricing, but drug company claims about how net prices are falling right now distort how much prices have increased over time.

The above graphic shows where a “lion’s share’ of the money pay’s at the register goes… to a bunch of middleman, that produce no products and have no inventory and yet decides how much profit the pharmacy grosses and the pharma manufacturer makes. These middlemen EXTRACT discounts, rebates, kickback from the Pharma’s for putting a particular pharma med on their approved formulary – no prior authorization is needed for the pt to get the medication that their prescribers wants for the pt…  It has been claimed that on some meds those $$$ could reach up to 75% of Average Wholesaler Price.. and that overall these middlemen can increase the price of the med to the pt by as much as DOUBLING IT… and all of those EXTRA DOLLARS drops into the middleman’s coffers.   This all started back in the 70’s and one has to wonder how politicians/bureaucrats were convinced that having more middlemen in our healthcare system – each with their own overhead and profit goal – would/could help lower overall healthcare costs.  When I first became licensed Pharmacist, none of these middlemen were around and Rxs were abt 6% of overall  medical costs and today they are up in the 12% range.  Even though “back in the day” we had 90%-95% brand name meds to fill Rxs and today we have about a 90% generic utilization.