For 2024, average brand-name drugs’ list prices grew by only 2.3%. What’s more, after adjusting for overall inflation, brand-name drug net prices dropped for an unprecedented seventh consecutive year. Details and additional commentary below.
As I predicted two years ago, the combined impact of changes to Medicaid rebates, the Inflation Reduction Act (IRA), and novel formulary access strategies have led multiple manufacturers to pop the gross-to-net bubble for high-list/high-rebate products. Consider the 18 products with list-price cuts shown below. Other drugmakers have reduced the rate of price increases, thereby inflating the bubble more slowly.
Employers, health plans, and pharmacy benefit managers (PBMs) determine the extent to which patients with insurance share in this ongoing deflation. But signs of change to the conventional approaches are undeniable.
New channel models—including smaller PBMs, cost-plus pharmacies, patient-paid discount card prescriptions, and manufacturers’ direct-to-patient businesses—are creating novel paths for drugs that can be sold without gross-to-net bubble distortions.
The bubble won’t vanish overnight. But for the first time in years, I can foresee a time when SpongeBob SquarePants will move on from Drug Channels.