The unseasonably warm January drug price changes
The CLIFF NOTES
As a non-profit, we at 46brooklyn have made it our goal to provide insights into U.S. drug pricing data available in the public domain based on the figures we’ve gathered over the prior month. In fairness, it’s been a minute since we’ve published one our monthly drug pricing updates.
But with the warm weather we’ve been enjoying in January in Ohio and some added bandwidth on our team, we realized that much like the sandworms of Arrakis rising from the dunes, now would be as good of time as any to bring these reports back. And since it’s been awhile since we’ve done one of these, let’s remind everyone that these monthly drug pricing reports can be a little long in the tooth (loyal 46brooklyn readers are shocked, surely), so if you’re not interested in all the dry details, we’ve got you covered at the start with just the cliff notes. And if after the high points, you’re hungry for more, the rest of this report will offer a feast of drug pricing data fit for Baron Harkonnen.
The start of a new year is a great time for both people and companies to make changes that are beneficial to either their own health or the “health” of their business. For many drug companies, this comes in the form of medication price increases.
There were 907 brand drug list price increases in January, and the price changes were all over the board. Of course, what really stood out to us this January was the number of meaningful (i.e., heavily utilized) brand-name drugs that took price decreases. The insulins and many of the respiratory inhalers were sliced to essentially half the list price that they were at in January 2023. Nevertheless, the spice must flow and so popular brand names for medical conditions including pain (Oxycontin, Nucynta), blood clots (Eliquis), or high blood pressure (Edarby, Edarbychlor) followed the typical beginning-of-the-year list price increase pattern we’ve been observing for the last decade plus.
Figure 1
Source: Drug Channels Institute
Bear in mind that as you read those numbers, that they are the prices before drugmaker rebates, which as we know are growing significantly over time and are at their largest amounts in the Medicaid programs.
And while we have become accustomed to all the attention paid to changes of brand drug list prices, we are big believers in also focusing on the drugs that are designed to provide relief from those rising brand prices, which are generic drugs.
On that often overlooked generic side of the coin, year-over-year (YoY) generic oral solid cost deflation hit 4.6% – a near historic low. While we still see some drugs creeping up in cost, it seems that most of the data is simply suggesting that generic drug costs are not coming down as fast as they once did. Whether this is a function of ongoing supply issues, reduced competition, or fewer generics coming to market (fewer brands to replace) is something we haven’t yet analyzed, but may warrant a closer look down the road.
So, as you start to come down from the proverbial high of a new year, and cabin fever starts to set, we remind everyone that Spacing Guild regulations require that we stay in our cabins for the duration of our travels, so we might as well dig into the details from January’s brand and generic drug pricing changes.
Brand-name medications
1. A big number of brand list price changes
There were a total of 907 brand-name medications that saw wholesale acquisition cost (WAC) price increases in January and 28 list price decreases, which is featured and contextualized in our Brand Drug List Price Change Box Score.
List price changes from end of December through January ranged from -78% to 33% and impacted $39 billion in prior year gross Medicaid expenditures (i.e., the majority of brand-name drugs in Medicaid). As a reminder, brand price increases in Medicaid are largely held in check thanks to the Medicaid Drug Rebate Program (MDRP), which includes rebate penalties for drug price increases that occur faster than the rate of inflation. While those rebate amounts are generally unknown, we cannot overlook the fact that those drugs which took price decreases in January are likely to pay less rebates this year as opposed to prior years. That is because there is a connection between list price and rebates. The impact this will have on state budgets should hopefully be mitigated by paying less up-front for the drugs to begin with, but states may find themselves wondering why their receivables are down if they didn’t prepare for this movement.
The lack of rebate information in the public is akin to the Bene Gesserit mysteries of the Dune galaxy. Analyzing brand drug list price changes provides an incomplete picture of what’s really happening with brand manufacturer economics, thanks to the growing lot of opaque rebates, discounts, and giveaways that drugmakers shave off those list prices. But alas, until PBMs, insurers, and rebate aggregators make more granular data on net prices public, we’ll continue working with what we’ve got.
2. Brand price trends over time
To help contextualize brand name drug list price increase behavior, we find it beneficial to review past trends. In comparison to the data from prior Januarys, the start of 2024 seems to fall right in line, coming in with a total of 879 (combined increase and decreases) branded price increases.
The highest number occurred in January 2023 with 1,014 net branded price increases whereas the lowest was over 10 years ago in January of 2012 when there were only 360 net list price increases.
To put it into a more recent perspective (over the last five years), in January 2024, there were a net (again, combined increases and decreases) of 879 brand price increases, 1,014 in January 2023, 870 in January 2022, 859 in January 2021, and 671 in January 2020.
Moreover, when further examining our brand drug box score visualization, we continue to see January being the de facto time of year for major brand price increases. Of the drugs that took increases so far this year, the median price increase has been 4.7% – the lowest percentage we have seen in over a decade even beating 2021’s percentage, which was 4.8%.
Figure 2
Source: Elsevier Gold Standard Drug Database, CMS State Drug Utilization Data, 46brooklyn Research
When weighting all the list price changes against prior year Medicaid expenditures (as tracked by CMS State Drug Utilization Data), we can see the massive impact that just a few drugs can have on the system as a whole (Figure 2).
As can be seen in Stat Box #4 in our Brand Drug List Price Change Box Score, the weighted average price increase of all brand drugs fell to 0.7% – its lowest point in over a decade
Of course, the cluster of list price decreases are by no means a coincidence. They are most obviously attributed to the American Rescue Plan Act, which lifted the Medicaid rebate cap on January 1, 2024 that previously ensured that drug manufacturers would never have to pay rebates that eclipsed the list prices of their medicines sold to Medicaid programs. Because getting drugs effectively for free wasn’t seen as enough, the Biden administration lifted the cap, pushing rebate penalty math to the point where for a number of medicines, manufacturers would not only have to give their medicines to Medicaid for free, but to actually pay additional money for the privilege of doing so. Some drugmakers opted to crater their prices to avoid the penalties. Then there’s drugs like Flovent, whose brand versions were pulled from the market entirely.
While the feds might not be able to cash in on the extra $17 billion in rebate penalties that they were anticipating from the lifting of the rebate cap, in some twisted way, the policy ended up taking drugmakers to their breaking point, so rather than tolerate yet another government rebate shakedown, manufacturers instead opted to pull the plug entirely. Regardless of why, the end result popped the proverbial gross-to-net bubble on these high-profile medicines, an unprecedented event in the modern drug pricing world.
3. Brand drug list price changes worth taking note of in January
We identify specific brand drugs worth taking note of in a couple different ways. Primarily, we look for medications with a lot of prior year Medicaid expenditures (PYME). We next look for drugs with large pricing changes (+/- 10%). And finally, we look for drugs that are interesting for us either because we’ve previously written on them or because we find them of unique clinical value. This month, when looking for these drugs in the brand arena, we found many worth mentioning (these are gross expenditures; actual net costs are likely much lower):
Asthma medications
· Advair Diskus (-60.0%; $254 million PYME)
· Advair HFA (-22.5%; $122 million PYME)
· Asmanex HFA (-50.0%; $7.2 million PYME)
· Symbicort (-40.0%; $529 million PYME)
Diabetes medications
· Apidra SoloStar (-70.0%; $9.3 million PYME)
· Apidra Solution (-70.0%; $3.5 million PYME)
· Lantus SoloStar (-78.0%; $551 million PYME)
· Levemir FlexPen (-65.0%; $102 million PYME)
· Novolog FlexPen (-75.0%; $188 million PYME)
· Victoza (-27.0%; $367 million PYME)
Pain medications
· Nucynta oral tablet (9.9%; $7.7 million PYME)
· Oxycontin oral tablet, extended release (9.0%; $40 million PYME)
· Butrans Transdermal patch (-40.5%; $23.5 million PYME)
Other medications
· Edarbi oral tablet (10.0%; $1 million PYME)
· Edarbyclor oral tablet (10.0%; $1 million PYME)
· Eliquis oral tablet (6.0%; $706 million PYME)
· Femring vaginal insert (19.7%; $605k PYME)
· Ferriprox oral solution (21.4%; $3.7 million PYME)
· Ferriprox oral tablet (13.2%; $14.3 million PYME)
· Horizant oral tablet, extended release (10.0%; 5.2 million PYME)
· Verkazia ophthalmic drops, emulsion (25.0%; $405k PYME)
· Wellbutrin XL oral tablet, extended release 24 hour (9.9%; $14 million PYME)
Advair Diskus (fluticasone propionate/salmeterol inhalation powder) is a dry powder inhaler used to treat asthma that took a huge decrease in WAC of -60.0%, resulting in $254 million in gross prior year Medicaid expenditures (PYME).
Advair HFA (fluticasone/propionate salmeterol inhalation aerosol), similar to its counterpart, Advair Diskus, is an inhalational aerosol for the treatment of asthma that also saw a decrease in WAC of -22.5%, which results in a savings of $122 million PYME.
Asmanex HFA (mometasone furoate inhalation aerosol) is an inhalational aerosol for the treatment of asthma that also saw a decrease in WAC of -50.0% or $7.2 million PYME.
Symbicort (budesonide/formoterol fumarate dihydrate inhalation aerosol) is an inhalational aerosol for the treatment of the chronic lung disease COPD as well as asthma. This medication also saw a decrease in WAC of -40.0% resulting in a decrease of $529 million PYME.
Apidra SoloStar (insulin glulisine) is a rapid-acting prefilled insulin pen for the treatment of type 1 or type 2 diabetes. This injectable medication saw a decrease in WAC by -70.0%, which results in a decrease of $9.3 million PYME.
Apidra Solution (insulin glulisine) is a rapid acting multidose insulin vial for the treatment of type 1 or type 2 diabetes. This injectable medication saw a decrease in WAC also by -70.0%, which ends up being a decrease of 3.5 million PYME.
Lantus SoloStar (insulin glargine) is a long-acting prefilled insulin pen for the treatment of type 1 or type 2 diabetes. This injectable medication saw a decrease of -78.0%, which will result in a decrease of $551 million PYME.
Levemir FlexPen (insulin detemir) is a long-acting prefilled insulin pen for the treatment of type 1 or type 2 diabetes. This injectable medication saw a decrease of -65.0%, leading to a decrease in $102 million PYME. Don’t get too excited though. It was announced that Levemir will be discontinued in April 2024.
Novolog FlexPen (insulin aspart) is a rapid acting prefilled insulin pen for the treatment of type 1 or type 2 diabetes. This injectable medication saw a decrease in WAC by -75.0%, which will result in $188 million decrease in PYME.
Victoza (liraglutide) is a GLP-1 prefilled non-insulin pen for the treatment of type 2 diabetes. This injectable medication saw a decrease in WAC of -27.0% for a savings of $367 million PYME.
Nucynta oral tablet (tapentadol) is an opioid pain medication for the treatment of acute pain. This medication took a 9.9% WAC price increase, which impacts $7.7 million PYME.
Oxycontin oral tablet, extended release (oxycodone) is an opioid pain medication for the treatment of severe pain. This medication saw an increase in WAC of 9.0%, which impacts $40 million PYME.
Butrans Transdermal patch (buprenorphine) is a topical opioid pain medication for the treatment of acute pain. This medication experienced a decrease of -40.5%, which will result in a decrease of $23.5 million PYME.
Edarbi oral tablet (azilsartan) is a medication used to treat high blood pressure. This medication experienced a WAC increase of 10.0%, which impacts $1 million PYME.
Edarbyclor oral tablet (azilsartan/chlorthalidone) is a combination medication used to treat high blood pressure. This medication experienced a WAC increase of 10.0%, which impacts $1 million PYME.
Eliquis oral tablet (apixaban) is a blood thinner, which experienced an increase in WAC of 6.0%, which impacts $706 million PYME. Eliquis has been 1 of 10 medications targeted by the U.S. Department of Health and Human Services (HHS) as one of the first drugs for the Medicare drug price negotiation. It was also one of the big drugs targeted by Senator Bernie Sanders in the Senate HELP Committee hearings last month.
Femring vaginal insert (estradiol acetate) is a vaginal estrogen ring used for women experiencing menopausal symptoms. This medication took a 19.7% WAC increase, which impacts $605k PYME.
Ferriprox oral solution (deferiprone) is a liquid medication that is used to treat iron overload in people with thalassemia syndromes, sickle cell disease or other anemias. It experienced a WAC increase of 21.4%, which impacts $3.7 million PYME.
Ferriprox oral tablet (deferiprone), similar to the Ferriprox oral solution above, the tablets, which are also used to treat iron overload in people with thalassemia syndromes, sickle cell disease or other anemias had a WAC increase of 13.2%, which equates to $14.3 million PYME.
Horizant oral tablet, extended release (gabapentin enacarbil) is a medication used to treat restless legs syndrome (RLS) as well as postherpetic neuralgia (PHN). This medication experienced a WAC increase of 10.0%, resulting in $5.2 million PYME.
Verkazia ophthalmic drops, emulsion (cyclosporine) is an eye drop used to treat vernal keratoconjunctivitis, which is a recurrent bilateral inflammation of the lining of the eye. This medication experienced a WAC increase of 25.0%, which results in $405k PYME.
Wellbutrin XL oral tablet, extended release 24 hour (buproprion) is a medication used to treat major depressive disorder (MDD) or prevent seasonal affective disorder (SAD). This medication experienced an increase in WAC of 9.9%, which results in $14 million PYME.
Generic medications
4. A mildly unfavorable, unweighted price change picture
Each month, we look at how many generic drugs went up and down in the latest month’s survey of retail pharmacy acquisition costs (based on National Average Drug Acquisition Cost, NADAC), and compare that to the prior month (Figure 3).
Basically, the quick way to read Figure 3 is to look for blue bars that are taller than orange bars to the left of the dotted line, and exactly the opposite to the right of the dotted line. That would indicate a good month – more generic drugs going down in price compared to the prior month, and less drug prices going up.
Figure 3
Source: Data.Medicaid.gov, 46brooklyn Research
Unfortunately, the generic picture for January didn’t align with there being less increases than decreases. For every generic drug that decreased in price this month, 1.2 increased in price. But as usual, take this unweighted price change analysis with a grain of salt. To really make heads or tails of all of these pricing changes, let’s weight these changes.
5. Weighted Medicaid generic inflation comes in at $3.7 million
The purpose of our NADAC Change Packed Bubble Chart is to apply utilization (drug mix) to each month’s NADAC price changes to better assess the impact. We use Medicaid’s 2022 drug mix from CMS to arrive at an estimate of the total dollar impact of the latest NADAC pricing update. As a reminder, we’re choosing the last full year picture we have in order to remove variances in drug mix from this equation (and focus just on the role of NADAC price changes play over time). This helps quantify what should be the real effect of those price changes above from a payer’s perspective (in our case Medicaid; individual results will vary). Said differently, if a drug that is hardly ever utilized takes a 50% decrease, it doesn’t matter as much if a drug everyone takes increases by 5% (the inverse of this is what we observed at the start of the year with the brand name insulin price decreases [see our prior report]).
The green bubbles on the right of the Bubble Chart viz (screenshot below in Figure 4) are the generic drugs that experienced a price decline (i.e. got cheaper) in the latest NADAC survey, while the yellow/orange/red bubbles on the left are those drugs that experienced a price increase. The size of each bubble represents the dollar impact of the drug on state Medicaid programs, based on their utilization of the drugs in the most recent trailing 12-month period (i.e. bigger bubbles represent more spending). Stated differently, we simply multiply the latest survey price changes by aggregate drug utilization in Medicaid over the past full year, add up all the bubbles, and get the total inflation/deflation impact of the survey changes. Hopefully that is clear enough that you don’t need to consult your Mentat.
Figure 4
Source: Data.Medicaid.gov, 46brooklyn Research
Overall, in January, there was just over $105 million worth of inflationary drugs, nearly perfectly offset by just over $102 million of deflationary generic drugs, netting out to approximately $3.7 million inflation for Medicaid, almost a wash.
6. Year-over-year generic oral solid deflation compresses to ~4.6%
Ever since June 2020, we have been tracking year-over-year generic deflation for all generic drugs that have a NADAC price. We once again weight all price changes using Medicaid’s drug utilization data. The purpose of this is to try to understand with the spice-blue eyed clarity of the Fremen just where drug prices are going. This month, deflation on oral solid generics and all generics declined to 4.6% and 2.1%, respectively (Figure 5). If you are a purchaser of generic drugs, a decline in this metric is not ideal as it means costs are declining at a less rapid pace. Historically, these numbers have been much higher and are continuing to trend downward.
Figure 5
Source: Data.Medicaid.gov, 46brooklyn Research
7. Top/notable generic drug decreases
There are several generic drug price decreases this month. The biggest decreases are the smoking cessation drug, varenicline 1 mg tablets, which took a 34.3% decrease; the antidepressant medication, venlafaxine HCl ER 225 mg tablets, coming in at a decrease of 43.3%; and the antiseizure medication, lamotrigine 100 mg orally dissolving tablets with a decrease of 44.9%.
8. Top/notable generic drug increases
On the increase side of things, the most impactful increases were venlafaxine HCl ER 75 mg tablets (57.6% increase) and atomoxetine 10 mg tablet (40.1% increase). This is interesting to see such an increase in the 75 mg strength of venlafaxine ER while the 225 mg tablet took a large decrease.
Combined, these two products account for $3.7 million in inflationary pressure to Medicaid.
That’s all for this month! Let’s hope that the start of 2024 with several popular brand name drugs taking huge price decreases continues to be a common theme throughout the year but we won’t hold our breath.
In general, the media coverage of the January brand drug price changes has been pretty solid relative to prior years. While there are too many to highlight here, we’d like to give shout-outs to Mike Erman at Reuters, Kristin Schwab at Marketplace, Steve Scott at WCBS, Veronica Salib at PharmaNewsIntelligence, Sydney Lupkin at NPR, Jennifer Calfas at Wall Street Journal, Aimee Picchi at CBS News, Ed Cara at Quartz, Ken Alltucker at USA Today, and Tami Luhby at CNN for each offering their own takes on the data and insights from our team.
Next week, check out 46brooklyn CEO Antonio Ciaccia at The Hill’s special event called Prescribing PBM Reform: Accelerating Transparency with Bipartisan Action.