In 2022, brand-name prescription drug prices fell for the fifth consecutive year, despite media coverage to the contrary. Even after adjusting for overall inflation, brand-name drug net prices decreased by nearly 9%.
Using data from SSR Health, Drug Channels Institute created a chart showing the change in average list and net prices for brand-name prescription drugs from 2014 through 2022.
The data available show a significant gap between the price changes in list price and net prices. From 2010 to 2015, the growth in list prices increased by 10 – 15%. Growth went from 13.5% in 2014 to 4.9% in the first three quarters of 2022. Average list price increases have been below 5% for the past four years.
Turning to net prices, in the first three quarters of 2022, net prices decreased by 0.8%, leading to a gross-to-net gap of 5.7%. When adjusting for inflation, net prices were even lower during the first three quarters of 2022, closer to an 8.7% decrease. List prices dropped by 3.4% when accounting for inflation.
Gross Versus Net Prices
The difference between gross prices and net prices varies, depending on myriad factors. Some of those factors include rebates paid to commercial payers, Medicare Part D plans, Medicaid, and other payers; discounts paid to providers under the 340B Program; manufacturer payments to drug channel participants (i.e., fees and discounts to pharmacies); and patient assistance and copayment support funds.
Often it is the rebates paid to third-party payers (both negotiated and those required by statute) that make up the greatest difference in gross-to-net price difference.
It is likely that the gross-to-net prices will continue to differ based on the above factors, as well as additional factors, such as pharmacy benefit managers, biosimilars and formulary exclusion lists. Additionally, changes coming to Medicare such as Part D rebates for prescriptions with list prices that increase faster than the rate of inflation and price negotiation for drugs used in Medicare, will likely impact drug prices.
Further complicating the picture, the American Rescue Plan Act eliminates the cap on Medicaid drug rebates starting in 2024. This means that for manufacturers who increase drug prices, they may have to pay the government (a more than 100% rebate) when their products are used by Medicaid beneficiaries.
About SSR Health
SSR Health publishes quarterly reports that identify drivers of aggregate net pricing trends. Its United States prescription pricing data tool “incorporates quarterly gross and estimated net pricing data and trends” from 2007 to present and includes the gross and net prices for most active brand-name prescription drugs in the United States.