The drug pricing holidays: Gifts for all
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 upon the figures we’ve gathered over the prior month. This month is of course no different – reviewing the latest drug pricing changes from the month November.
The latest news
It seems like we wait all year for Thanksgiving to approach, and in typical holiday fashion, the holidays come in like a wrecking ball — out of seemingly nowhere — hitting us hard, fast, and leaving us disoriented. This post-holiday dazed and confused feeling is not too dissimilar from wading through the intricacies of drug pricing in the U.S.
The cost of healthcare in the United States continues to rise, and companies are looking at ways to help contain costs. For example, many of the new drugs that have come out in the last year such as the Zepbound, Mounjaro, and Wegovy’s of the world have been heavy hitters when it comes to pricing. These medications have caused employers to really take a deeper dive into the overall cost of these weekly injections and make some tough financial decisions on whether or not to “cover” these life-altering products for their employees.
Medicare has even begun heavily scrutinizing the cost of their most commonly used medications and is now able to directly negotiate (or set, depending on your perspective) prices with drug manufacturers to lower the price of certain high-cost brand name prescription drugs used by Medicare beneficiaries thanks to the Inflation Reduction Act.
In August of 2023, there were 10 drugs targeted for government price reduction, and as of the recent announcement from the Department of Health and Human Services (HHS), there will now be a cost savings for 64 prescription drugs that saw prices rise beyond rates of inflation. The drugs selected for this list will have a lowered Part B coinsurance rate from January 1, 2025 to March 31, 2025. Medicaid has a similar program — Medicaid Drug Rebate Program (MDRP) — that works to insulate government programs from the rising list prices of medicines, as it includes rebate penalties for drug price increases that occur faster than the rate of inflation.
Taking a quick look at these 64 Part B prescription medications, a couple immediately stand out. Yescarta is a medication that just this month had a 9% increase in price, resulting in $5.9 million gross prior year Medicaid expenditures (PYME). We wrote about Krystexxa in our February 2024 drug pricing report where we noted that it took a modest WAC increase of 2.4% (at least in comparison to the median price increase of 4.9%), but it did impact roughly $37 million in PYME, making it the potentially highest gross cost price increase impact for our February report.
In addition to Medicare Part B drug price penalty discounts, another cost-savings benefit that begins January 1, is for those with Medicare Part D. Medicare Part D patients will benefit from a $2,000 cap on annual out-of-pocket prescription drug costs in 2025. Another feature is that patients with Medicare Part D can also now choose to spread out their out-of-pocket prescription drug costs throughout the calendar year, instead of paying all at once at the pharmacy. This will help many seniors who are on a fixed monthly budget as it will create more predictable, lower monthly costs.
Lastly, it looks like pharmacy benefit managers (PBMs) squeaked out a last-minute gift from Santa, as a pile of sought-after PBM reforms (and NADAC improvements) that were stuffed into a sweeping end-of-year spending package got nixed before the holidays. However, the reprieve could be short-lived, as both Congress and President-Elect Trump have called their respective shots on taking on the much-maligned drug intermediaries
Speaking of PBMs, they probably didn’t enjoy some of the recent revelations about their role in exacerbating the opioid epidemic. See the recent stories from Barron’s and the New York Times, as well as a recent lawsuit filed from Utah Attorney General Sean Reyes. Obviously, laying even a majority of the blame for our nation’s opioid crisis at the feet of PBMs would be incredibly absurd, but there seems little arguing with the fact that the conflicts of interest that plague the PBM industry reared their ugly heads at the dawn and throughout the duration of our nation’s reckoning on prescription drug abuse.
The Cliff Notes from last month’s drug price changes
There were a net of just seven brand drug list price increases in November 2024, with the impact of price changes ranging from $4k (Iyuzeh ophthalmic drops) on the low end of gross prior year Medicaid expenditures (PYME) up to $5.9 million (Yescarta suspension) on the much higher end.
Typically, we see prices changes all over the board, some of which can impact just a few hundred dollars of PYME, whereas others are hundreds of millions of dollars. In November, some medications have as low as a 3.4% list price increase, whereas others have an increase of up to 9.0%. Depending on the price of a medication, even a small overall percentage increase could be substantial enough to be thousands or even millions of dollars compounded over time.
In November, only two medications took a price decrease, which is up a bit from the September data where no medications took a price decrease but the same as October where we also saw two brand drugs take a decrease.
Some of the biggest and/or most interesting movers to take note of for November 2024 were:
· INGREZZA capsule (3.4% increase; $3 million PYME)
· YESCARTA suspension for injection (9.0% increase; $5.9 million PYME)
· Qsymia oral capsule (6.0% increase; $N/A PYME)
· Iyuzeh ophthalmic drops (6.0% increase; $4k PYME)
· Lidoderm Transdermal patch (4.9% increase; $N/A PYME)
Some standout price increases are for treatment for medical conditions that include chorea/tardive dyskinesia (Ingrezza capsules), lymphoma (Yescarta injection), weight loss (Qsymia capsules), elevated intraocular pressure (Iyuzeh eye drops), and various types of pain (Lidoderm transdermal patch).
Of course, these numbers are just part of the drug pricing context for these drugs. The figures presented above are the prices before drug channel mark-ups (hospital chargemasters, 340B providers, PBMs, GPOs, wholesalers, pharmacies, etc.) and more importantly, drugmaker rebates, which as we know are growing significantly over time and are at their largest amounts in the Medicaid and 340B programs.
On the generic side of the coin, year-over-year (YoY) generic oral solid price is at 27.4%. But we had already previewed that last month so we’re less inclined to dwell upon that learning for this month. But it is important to remember that measuring drug prices just by their drug reference prices may not tell us all that much about drug prices if the price we pay is disconnected from those prices anyway.
It can be hard to know what changes will occur from one month to the next, so, as the holidays retreat, make sure to come back next month to see which medications have been naughty (increase in price) and which have been nice (decrease in price) as we wrap up 2024 with the December price changes.
What we saw from brand-name medications in November
1. A SMALL number of brand drug list price changes
There were a total of nine brand-name medications that saw wholesale acquisition cost (WAC) price increases in November and two that took decreases, which is featured and contextualized in our Brand Drug List Price Change Box Score, which pulls pricing data from Elsevier.
Price changes this month ranged from -50.7% to 9%. 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 then the rate of inflation. Medicare now has similar cost containment provisions. Commercial employers and cash-paying patients, not so much.
This is one of a number of reasons that solely analyzing brand 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, wholesalers, 340B covered entities, 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
Figure 1
Source: Elsevier Gold Standard Drug Database, CMS State Drug Utilization Data, 46brooklyn Research
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 months of November, this year seems to line up almost identically with November 2023, which had 10 (combined increase and decreases) branded price changes. Looking at past trends, overall, November is a month where there have been consistently a small number of branded price changes.
The highest number occurred 10 years ago in November 2014 with 67 net (increases minus decreases) branded price increases, whereas the lowest is a tie of November 2019 and November 2024 when there were only seven net price increases.
To put it into a more recent perspective (over the last five years) in November 2024, there were a net of seven medications, 10 in November 2023, 20 in November 2022, n/a for November 2021, and 21 in November 2020.
Moreover, when further examining our brand drug box score visualization, we continue to see November being the time of year where a small number of changes are occurring for both brand price increases and brand price decreases.
Of the drugs that took increases so far this year, the median price increase has been 4.5% — a percentage that has been holding steady without much fluctuation since 2019.
3. Brand drug list price changes worth taking note of in November
We identify drugs worth taking note of in a couple different ways. Primarily, we look for medications with a lot of prior Medicaid expenditures (not that Medicaid is the end-all-be-all, but it is the only program that regularly publishes past utilization with some decent granularity). 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 have several of each worth mentioning:
Chorea/Tardive Dyskinesia
· INGREZZA capsule initiation pack (3.4% increase; $3 million PYME)
· INGREZZA oral capsule (3.4% increase; $983k PYME)
· INGREZZA SPRINKLE oral capsule (3.4% increase; N/A PYME)
Non-Hodgkin lymphoma
· YESCARTA suspension for injection (9.0% increase; $5.9 million PYME)
Weight loss
· Qsymia oral capsule (6.0% increase; $344k PYME)
Eye drops
· IYUZEH ophthalmic drops (6.0% increase; $4k PYME)
· VIGAMOX ophthalmic drops (-50.7% decrease; N/A PYME)
· Maxidex ophthalmic drops (-20.7% decrease; $533k PYME)
Pain
· Lidoderm Transdermal patch (4.9% increase; N/A PYME)
INGREZZA [initiation pack, capsules, and SPRINKLE capsules] (valbenazine) are vesicular monoamine transporter 2 (VMAT2) inhibitors indicated for the treatment of adults with tardive dyskinesia and chorea associated with Huntington’s disease. These three medications all took an increase in WAC of 3.4%, resulting in $3 million, $983K, and n/a in gross prior year Medicaid expenditures (PYME) respectively.
YESCARTA (axicabtagene ciloleucel) is a suspension for IV infusion used to treat two different types of non-Hodgkin lymphoma: Large B-Cell Lymphoma and Follicular Lymphoma. This medication also saw an increase in WAC of 9.0%, which resulted in an additional $5.9 million in gross prior year Medicaid expenditures (PYME). This is the largest increase for the November data.
Qsymia extended-release capsules (phentermine and topiramate) is a combination of phentermine, a sympathomimetic amine anorectic, and topiramate, indicated in combination with a reduced-calorie diet and increased physical activity to reduce excess body weight and maintain weight reduction long term in: adults and pediatric patients aged 12 years and older with obesity and adults with overweight in the presence of at least one weight-related comorbid condition. This medication experienced an increase in WAC of 6.0%, or in other words, $344k in gross prior year Medicaid expenditures (PYME).
IYUZEH ophthalmic drops (latanoprost) is a prostaglandin F2α analogue indicated for the reduction of elevated intraocular pressure in patients with open angle glaucoma or ocular hypertension. IYUZEH is the first and only preservative-free latanoprost for patients. This medication had an increase in WAC of 6.0%, resulting in an increase of $4k in gross prior year Medicaid expenditures (PYME).
VIGAMOX ophthalmic drops (moxifloxacin) is a topical fluoroquinolone anti-infective indicated for the treatment of bacterial conjunctivitis caused by susceptible strains of the several different organisms. This medication experienced a decrease in WAC by 50.7%, resulting in a currently unknown decrease in gross prior year Medicaid expenditures (PYME).
Maxidex ophthalmic drops (dexamethasone) is an adrenocortical steroid prepared as a sterile topical ophthalmic suspension. Notably this medication had a 20.7% decrease in WAC, resulting in $533k decrease in gross prior year Medicaid expenditures (PYME).
Lidoderm transdermal patch (lidocaine) is indicated for relief of pain associated with post-herpetic neuralgia. This medication had a 4.9% increase in WAC with an unknown increase in gross prior year Medicaid expenditures (PYME).
What we saw from generic medications in November
4. A relatively flat, 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 2).
Basically, the quick way to read Figure 2 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 2
Source: Data.Medicaid.gov, 46brooklyn Research
When you look at the bar graph on the left side you can see that the blue bars are almost non-existent compared to the orange bars (with an exception for the 0-10% blue bar). On the right-hand side, you can see that the blue bar for the 0-10% increase is substantially higher than the orange bar. The blue bars for 10-20% and 20-30% are slightly higher than orange. Therefore, in November you can see that there were a substantial number of decreases in generic prices compared to October with the exception of the 0-10% range where 12,575 price decreases were seen; whereas in November, the amount of medication decreases for the same range was only 4,236.
To the right of the line, the November data is showing a higher number of generic medications with price increases specifically in the 0-10% range, resulting in 2.479 price increases. Conversely, in October, there were 8,423 price increases in this same range. The 10-20% increase range was higher in October with 1,551 generic price increases compared to November, which had 613.
For every generic drug that increased in price this past month, 0.15 decreased 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 drug costs come in at $51 million in deflation
The purpose of our NADAC Change Packed Bubble Chart (Figure 3) is to apply utilization (drug mix) to each month’s NADAC price changes to better assess the impact. We use Medicaid’s 2020 drug mix from CMS to arrive at an estimate of the total dollar impact of the latest NADAC pricing update. This helps quantify what should be the real effect of those price changes from a payer’s perspective (in our case Medicaid; individual results will vary).
The green bubbles on the right of the Bubble Chart viz (screenshot below in Figure 3) are the generic drugs that experienced a price decline (i.e. got cheaper) in the latest 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 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.
Figure 3
Source: Data.Medicaid.gov, 46brooklyn Research
Overall, in November, there was only $25 million worth of inflationary drugs, with a HUGE offset of $560 million of deflationary generic drugs, netting out to approximately $535 million of generic drug cost deflation for Medicaid.
These numbers are somewhat similar to last month’s report, where we also saw $51 million in deflation, as there was just over $69 million worth of inflationary drugs, with $119.9 million of deflationary generic drugs, netting out to approximately $51 million of generic drug cost deflation for Medicaid.
The month-over-month increase bubble chart is almost non-existent compared to its month-over-month decrease counterpart, which is exactly what occurred in October as well. So, for the month of November, the generic drug price decreases improved substantially, coming in around $560 million compared to just last month in October where we saw about $119 million. As we teased last month, this November 2024 NADAC survey has resulted in the single biggest generic drug cost deflation we have observed thus far (and we have already made that statement once this year, back in April).
6. Year-over-year generic oral solid deflation at 27.4%
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. This month, deflation on oral solid generics and all generics was at 27.4% and 24.2%, respectively (Figure 4). If you are a purchaser of generic drugs, an increase in this metric is ideal as it means costs are declining. This is right in line with the NADAC packed bubble chart, which also showed the cost of generic drugs decreasing. Businesses generally enjoy it when their input costs go down.
Figure 4
Source: Data.Medicaid.gov, 46brooklyn Research
7. Top/notable generic drug decreases this month
For November, the drug price decrease and increase bubbles were opposite of one another with the decrease bubble being much larger. After reviewing the various sizes and colors that compromise this month-over-month decrease, there are some notable decreases.
There are a ton of generic drug price decreases this month, with some being more interesting than others. Some of the biggest decreases include smoking cessation medication, the continuance of ADHD medications, and an eye drop medication.
Two of the largest outliers in the packed bubble chart is vareniciline 1mg tablet, which shows the cost decreasing by -51.0%, and loteprednol etabonate eye drops by -62.3%.
Over the last few months, we have seen ADHD medications decreasing in price (for the most part), and this month is no different. Long-acting ADHD medications decreasing in price this month include dexmethylphenidate ER 30mg and 15 mg capsules decreasing by -55.5% and -40.4%, respectively.
Other long-acting ADHD medications that took a large decrease this month include methylphenidate LA 10mg and 20mg capsules by -41.1% and -45.8%, respectively, as well as methylphenidate ER (CD) 20mg decreasing by -58.2%.
It’s no surprise that vareniciline (brand name Chantix) 1mg tablets for smoking cessation took a decrease by -51.0%, as there are multiple studies about the cost-effectiveness of this smoking cessation medication. Studies like this one from JAMA often calling it the most cost-effective treatment option for smoking cessation.
Oddly enough, the smallest medications (i.e. eye drops, inhalers, ear drops) often tend to be the costliest; however, loteprednol etabonate eye drops decreased this month by -62.3%. This steroid eye drop decreases inflammation and swelling associated with inflammatory conditions such as seasonal allergic conjunctivitis and post-operative pain.
8. Top/notable generic drug increases
On the increase side of things, the most impactful increases of 50% or above were phenytoin sodium 100mg capsules (53.1% increase) and levothyroxine 88mcg capsules (54.8% increase).
Other notable increases include additional strengths of the capsule form of the popular thyroid medication, levothyroxine. Various strengths of this medication increased in cost as follows: 25mcg capsule (42.6% increase), 50mcg capsule (25.1% increase), 75 mcg capsule (24.2% increase), and 125mcg capsule (44% increase).
It is interesting to see that while many ADHD medications are decreasing in cost, there continue to be a few each month that are increasing their costs especially as ADHD medications continue to be a reoccurring drug shortage these last few years.
In November, we saw an increase for lisdexamfetamine 10mg, 40mg, 50mg, and 70mg capsules (18.8%, 5%, 12.4%, and 13.7% increase, respectively), which are all currently on the FDA drug shortage list.
We also saw increases in other ADHD medications, including dextroamphetamine/amphetamine 10mg capsule (9.4% increase), dexmethylphenidate 10mg (8.4% increase), dexmethylphenidate ER 20mg capsule (6% increase).
That’s all for this month! Get ready for the new year price increase fun next week!