The Inflation Reduction Act, a significant piece of healthcare legislation, was passed by Congress and signed into law by President Joe Biden in 2022. It introduced new policies for negotiating the cost of prescription drugs covered by Medicare. One of the key provisions of this act was the mandate for the Centers for Medicare and Medicaid Services to negotiate directly with pharmaceutical producers for the prices of some anticancer drugs. This negotiation process, which goes into effect nine years after approval for small-molecule drugs, a category of therapeutics with low molecular weights allowing for easy entry into cells throughout the body, is a crucial step in controlling drug costs. At the time the Inflation Reduction Act went into effect, the Federal Drug Administration had approved approximately 88 small-molecule drugs for cancer treatment.
One aspect that the Inflation Reduction Act did not address was the 'launch price,' which refers to the initial cost of new drugs when they first enter the market. This omission may lead to common increases in launch prices for some drugs, particularly those covered by the Medicare prescription drug benefit (Part D), which includes many oral anticancer medications.
To evaluate trends in launch prices, a group of doctors and researchers documented price increases for anticancer drugs covered under Medicare Part D and approved between 2010 and 2024. They published their findings in a letter to the Journal of the American Medical Association (JAMA). The researchers adjusted all prices for inflation to 2025 US dollars.
The research found that the mean monthly launch price increased from about $11,000 (2012-2014) to about $28,000 (2023-2025). Mean launch prices increased by $1,694 annually. Notably, the research estimates that 2025 drug prices significantly exceeded by between 14.8% and 200.9%, the launch price expected based on inflation alone. While the observed launch prices remained higher than the expected price, the differences between the observed and expected prices decreased over time.
These findings suggest that drug companies may have maximized pricing even before the Inflation Reduction Act, as the authors uncovered no evidence of disproportionate launch prices for small-molecule anticancer drugs since the passing of the Inflation Reduction Act. However, the study still concludes that costs for these drugs have grown steadily over the past 15 years.