Prescription Drug Prices will Continue to Rise in 2023
The high cost of prescription drugs will continue to be a “Top 10” issue for 2023. Prescription drug release prices were at record highs in 2022, causing many to demand action. Recent investigations found the median annual price of 13 novel drugs approved for chronic conditions by the U.S. Food and Drug Administration was $257,000 this past year.
With the passage and signing of the Inflation Reduction Act in 2022, there is now some forward movement toward prescription drug price control. The bill leverages the federal government as the largest purchaser of drugs and includes provisions that allow the federal health secretary to negotiate the prices of a small selection of drugs each year for Medicare. Scaling slowly, the bill allows the government to negotiate “a fair price” for 10 drugs covered by Medicare Part D in 2024 and to implement those new prices starting in 2026. Medicare would select from the 50 drugs with the highest total annual Medicare costs.
The negotiated price list would then expand to 15 drugs in 2027 and 2028. In 2029 and subsequent years, 20 drugs would be negotiated. Medicare will only be allowed to select Medicare Part B drugs starting in 2028. Overall, to be eligible for negotiation, drugs must have been approved for nine years for small molecule entities and 13 years for biologics, and a drug would be removed from the list if a generic alternative becomes available.
While these changes will have no immediate impact for patients or Medicare spending, this process lays the foundation for future federal action on drug pricing. The bill also capped out of pocket expenses starting in 2025 and eliminated the prescription drug donut hole – a long-standing barrier to patient access. Leading Republicans have openly stated that if they controlled Congress, they would move to repeal or dramatically restructure this law. However, with the Senate remaining in Democratic control, the Inflation Reduction Act appears to be secure in the near term.
Cost caps and rebates
The cost of insulin nationwide has been a critical issue, and the Inflation Reduction Act attempted to cap the price of insulin at $35 per month. However, the cap was ruled out of order by the Senate parliamentarian, who ruled the cap could apply on Medicare but not on private insurance. As a result of that ruling, the Democrats split the measure between Medicare and private insurance, but Republicans ultimately blocked the measure for private insurance and insulin pricing concerns will continue into 2023.
The parliamentarian also ruled that a measure in the bill forcing drug companies to offer rebates if prescription prices outpaced inflation was not totally in line with the rules for budget reconciliation. The ruling also stated this measure could only apply to Medicare patients and not to those with private insurers. This provision began in October for Part D drugs and will start in January 2023 for Part B drugs.
Pricing relief from the private sector
In the private sector, the expansion of companies like Civica and Mark Cuban Cost Plus Drugs (MCCPD) are stepping in to provide more immediate drug pricing relief. We expect continued expansion of their portfolios in 2023.
Civica Rx is a non-profit generic drug company established as a 501(c)(4) social welfare organization by U.S. health systems and philanthropies to provide a reliable supply of essential oral and injectable low-cost medicines on a cost-plus basis. Civica’s current list includes 67 different drugs that are provided to its member hospitals. To date, the company has supplied over nine million vials or syringes of generic medications to hospitals, which have been used to treat up to three million patients. Civica Rx and its affiliated ventures are on track to produce up to 100 drugs by 2023.
The organization is also building a state-of-the-art pharmaceutical manufacturing facility in Virginia, where it will manufacture its biosimilar insulin offerings priced at no more than $30 per vial. CivicaScript LLC, is a public benefit company dedicated to bringing lower-cost generic medicines to U.S. consumers. CivicaScript will develop and manufacture common but high-priced generic medicines for which there is currently not enough market competition to drive down price. Using a cost-plus and price transparent model, CivicaScript, with its health plan partners, plans to lower the cost of prescription medicines to ensure that patients benefit from them at lower costs.
MCCPD as a public benefit company fills and delivers prescriptions at cost plus a fixed 15% margin. Prescriptions are fulfilled by accredited pharmacies. MCCPD ships prescriptions to patients nationwide and is available to patients directly or through employer sponsored programs. To date, MCCPD has nearly 1,000 highly utilized and/or high-cost generic medications and is working to expand in 2023 to over 1,500 generic medications as well as working with trade name manufacturers to add both single source brands and specialty biologics to their offering.
In terms of health system price increases, Vizient in their Pharmacy Market Outlook is forecasting an aggregate 3.26% overall drug price inflation rate for the calendar year beginning Jan. 1, 2023. The rate reflects a continued trend toward moderation of the overall increase in drug prices, a result of the balance between the increased use of high-cost medications, the introduction of lower-cost generic drugs, and greater utilization of biosimilars.
Overall, 2023 prescription drug price increases will continue to roll on as the general course of action. Patients and health systems may have more options in 2023 to control prices – however, that will come at the cost of increased complexity to navigate.
Here at Visante, we help hospitals and health systems to make the most of their programs and optimize savings. Contact us at firstname.lastname@example.org to talk to one of our team members.