Medicine & Health

Unsubstantiated drug price hikes cost $1.67B last year

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Pharmaceutical companies continue to increase the prices of their most profitable drugs despite minimal year-over-year improvements, according to a new report.

Seven of the top 10 drugs that inflated U.S. healthcare spending in 2020 due to price increases did not offer substantial clinical benefits, the Institute for Clinical and Economic Review’s analysis found. The price hikes of those seven drugs increased healthcare spending by an estimated $1.67 billion last year, with AbbVie’s rheumatoid arthritis biologic accounting for $1.4 billion alone.

“My biggest issue with adalimumab (Humira) is the patent thicket they have developed to thwart competition,” said Erin Fox, senior pharmacy director at University of Utah Health, who wasn’t involved in the report. “There should be biosimilar products available for patients, but with small tweaks like a ‘sting free’ formulation—the patent keeps extending.”

AbbVie has been sued for its array of patents shielding Humira from U.S. competition until 2023. Since biosimilars of its $20 billion drug will hit the market in just more than a year, it’s not surprising to see significant price hikes towards the end of its patent, Fox added.

Humira’s net price in the U.S. increased an estimated 29.6% from the beginning of 2017 to the end of 2020, the ICER report revealed. ICER researchers started with 250 drugs that recorded the largest sales revenue and narrowed it down by excluding products that didn’t have at a price hike that exceeded inflation by 2%. They also eliminated drugs when spending was predominantly tied to volume increases.

Humira is projected to be the primary driver of drug spending in 2022, according to Vizient’s market outlook. But the price is expected to drop in 2023, similar to the trends in other countries where AbbVie faces biosimilar competition.

“Increasing drug costs are a key driver in the rising cost of providing care. We agree it is a problem that prices for drugs continue to increase without new evidence of increasing benefit for the existing drugs and/or any new formulations,” said Steven Lucio, vice president of pharmacy solutions at the group purchasing organization Vizient. “It is difficult to evaluate the utility of these price increases for the healthcare system because we don’t know exactly where companies invest the additional money they receive through price increases.”

AbbVie disputed ICER’s “incomplete value assessment,” which are inherently flawed, the company said.

“Despite ICER’s own recognition that it lacks the capacity to perform full economic analyses that would be necessary to arrive at the conclusions in this report, the UPI report is published without adequate context or clarity for why ICER feels justified in making such inferences,” AbbVie said in response to the report.

Drugmakers have deployed a series of tactics like patent litigation, rebate manipulation and pay-for-delay schemes that stave off generic and biosimilar competition. As for Humira, the first of five biosimilars was approved in 2016. Delaying competitors often leads to higher healthcare costs, which bogs down the entire system.

Patent law should be adjusted to prevent companies from “evergreening,” or making changes of little consequence to a product to extend its patent protection, industry experts said. While many companies have limited their year-over-year price increases in recent years amid public scrutiny and legislative proposals, new prescription drugs continue to be launched with higher prices, ICER researchers wrote.

“If U.S. policymakers want a value-based system that fairly aligns a drug’s price with its ability to help patients, then we will need evidence-based tools to assess the fairness not only of price changes, but launch prices too,” ICER experts wrote to Modern Healthcare.

The Food and Drug Administration and Federal Trade Commission partnered in 2020 to limit anticompetitive behavior in the pharmaceutical sector, including the filing of sham citizen petitions to delay competitors. But the FTC does not have the authority to take civil action against a manufacturer, the consulting and group purchasing organization Premier noted in a letter to the FDA.

“Premier urges the FDA and FTC to work with Congress to pass legislation that allows the FTC to take civil action to deter drug companies from filing sham citizen petitions to delay approval of competing generics or biosimilars,” the company wrote.

While Democrats nixed a provision from President Joe Biden’s Build Back Better agenda that would’ve allowed Medicare to negotiate prices with pharmaceutical companies, policymakers continue to press the issue.

Democrats recently proposed legislation that would lower prescription drug costs for Medicare beneficiaries, cap out-of-pocket Medicare costs at $2,000 and reduce the price of insulin.

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