Prices of Hundreds of Drugs Outpace Inflation

HHS report finds 1,216 medications rose an average 31.6% over 12 months

Peter Urban,

AARP

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Published October 04, 2022

tipped over prescription drug bottle with pills spilling out in the form of a dollar sign

JulNichols / Getty Images

List prices on more than 1,200 prescription drugs rose faster than inflation between July 2021 and July 2022, rising on average 31.6 percent, according to a new report the Department of Health and Human Services (HHS) says illustrates the need for a key provision of the Inflation Reduction Act.

Under the new law, pharmaceutical companies that raise the price of their products more than the rate of general inflation will have to pay Medicare a rebate for those outsize price hikes. The provision is designed to help reduce the size and frequency of prescription drug price increases, according to HHS. Price tracking that will be used to assess rebates began on Oct. 1.

“In recent years, prescription drug prices have skyrocketed, but thanks to the Inflation Reduction Act, America’s families will soon start seeing relief,” HHS Secretary Xavier Becerra said in a statement.

Drug price report highlights

Using data aggregated by the web-based analytical tool AnalySource, HHS’s Office of Health Policy examined all prescription drug price increases that occurred in January and July of 2022. The two months, the office notes, historically account for most of the drug price increases that occur each year.

Among its key findings:

The list price of more than 3,000 drugs increased in January and/or July of 2022, a greater number than in January and July of 2021.
The average price increase was nearly $150 per drug (10 percent) in January 2022, and it was $250 (7.8 percent) in July 2022.
There were 1,216 products whose price increases during the 12-month period from July 2021 to July 2022 exceeded the inflation rate of 8.5 percent for that time period. The average price increase for these drugs was 31.6 percent.
The sharpest percentage price hike (over 1,000 percent) was for fluconazole, an antifungal medication. The wholesale package price increased from $2 to $24 or more.
The largest list price increase, however, was for two cancer medications, Tecartus and Yescarta. Each saw its wholesale package price climb from $399,000 to $424,000.

Rx spending on the rise

A second report issued by HHS on Sept. 30 found that the U.S. health care system continues to spend more each year on prescription drugs largely due to price growth.

Overall spending reached $603 billion in 2021 (before considering any rebates), according to the report, which was based on data collected from 2016 through 2021 from a panel of pharmaceutical wholesalers, distributors and pharmaceutical manufacturers representing 90 percent of the marketplace.

Drug spending is increasingly driven by a relatively small number of high-priced products. “The cost of specialty drugs has continued to grow, totaling $301 billion in 2021, an increase of 43 percent since 2016. Specialty drugs represented 50 percent of total drug spending in 2021,” according to the report.

The Inflation Reduction Act includes another provision to address drug pricing that will allow HHS to negotiate the prices of certain prescription drugs covered by Medicare Parts B and D. The first negotiated prices will take effect in 2026 for drugs covered under Medicare Part D plans. These are the prescriptions you typically fill at your pharmacy. For medications covered under Part B — which pays for doctor visits, diagnostic tests and other outpatient services, such as chemotherapy and other drug infusions at a hospital or doctor’s office — negotiated prices will take effect in 2028. 

Top 5 drugs by price increase

Source: HHS Office of Health Policy

Top 5 drugs by percentage increase

Source: HHS Office of Health Policy

Peter Urban is a contributing writer and editor who focuses on health news. Urban spent two decades working as a correspondent in Washington, D.C., for daily newspapers in Connecticut, Massachusetts, Ohio, California and Arkansas, including a stint as Washington bureau chief for the Las Vegas Review Journal. His freelance work has appeared in Scientific American and on Bloomberg Government and CTNewsJunkie.com.

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Peter Urban is a contributing writer and editor who focuses on health news. Urban spent two decades working as a correspondent in Washington, D.C., including a stint as Washington bureau chief for the Las Vegas Review-Journal, and for daily newspapers in Connecticut, Massachusetts, Ohio, California and Arkansas, His freelance work has appeared in Scientific American, Bloomberg Government and CTNewsJunkie.com.