A new report finds that 1,216 pharmaceuticals increased their prices past the inflation rate of 8.5% from July 2021 to July 2022, with an average hike of 31.6%.
The report and a second report on price trends released Friday by the Department of Health and Human Services (HHS) underline how a new provision in the Inflation Reduction Act—an inflationary cap on Part D costs—will affect prices right as the cap is implemented 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,” said HHS Secretary Xavier Becerra.
The reports explored drug price increases and trends from 2016 through 2022. They found that last year, the healthcare system in the U.S. spent $603 billion on prescription drugs before considering any rebates. Of that $603 billion, there was $421 billion spent on retail drugs.
“Spending growth on drugs was largely due to growth in spending per prescription, and to a lesser extent by increased utilization (i.e., more prescriptions),” according to an HHS release.
The report also found that the cost of specialty drugs—a key driver of spending growth—continues to surge. Overall specialty drug spending totaled $301 billion in 2021, up by 43% since 2016, the release said.
“Specialty drugs represented 50% of total drug spending in 2021,” HHS added. “The top 10% of drugs by price make up fewer than 1% of all prescriptions, but account for 15% of retail spending and 20-25% of non-retail spending.”
The Inflation Reduction Act has a new requirement starting Oct. 1 that would cap any price hikes in Medicare Part D that go beyond the rate of inflation. Another key part of the law that passed earlier this year is granting Medicare the authority to negotiate prices for a small subset of drugs in Medicare Part B, but that authority doesn’t go into place until 2026.
HHS relied on data from web-based analytical tool AnalySource that aggregate information on drug prices form purchasers, wholesalers, pharmacies and hospitals, one of the reports said.