Soaring drug prices are leaving inflation in the dust

A new analysis of  recently introduced pharmaceuticals found that the median list price of a drug at launch increased 24% a year between 2022 and 2024, adjusted for inflation, while the net price, taking into account rebates and discounts, rose a stunning 51% a year, far outpacing inflation.

The report by the non-profit Institute for Clinical and Economic Review (ICER), a drug price watchdog,  looked at all 154 novel drugs and biologics approved by the Food & Drug Administration during the two year period. It calculated that the median post-discount annual price for a new drug, which is what most insurers pay, is now $274,795, up from  $182,271 in 2022.

That means drug prices rose at a rate that far exceeded the 2024 inflation rate of 3%, the overall healthcare inflation rate of 6%, and gross domestic product growth of 2.8%. “Launch prices are going up, patient access is going down, and in many cases, we are overpaying for treatments,” said ICER president Sarah K. Emond.

ICER said gene and cell therapies, orphan drugs, first-in-class drugs, cancer treatments, and endocrine drugs were all associated with higher launch prices.

The Trump administration, and before that President Biden, made bringing down high drug prices a key initiative. Under President Biden’s Inflation Reduction Act of 2022, Medicare is empowered to negotiate drugs prices for the first time, and pharmaceutical companies are penalized for increasing the price of certain drugs faster than the inflation rate.

President Trump plans to launch TrumpRx in 2026, a direct to consumer drug portal, that is meant to offer lower prices, and has demanded that drug makers bring down the prices of prescription drugs in the U.S. to match the lowest price offered in other developed nations — known as the most-favored-nation price.