Two blockbuster cancer drugs see New Year price hikes

Drugmakers raised prices on more than 400 drugs in the early days of 2020, including two blockbuster cancer treatments that have been top-expenditure drugs in Medicare Part B, according to healthcare analysts and CMS data.

The CMS attributed an increase in Part B premiums and deductibles in 2020 to increased spending on physician-administered drugs. Part B premiums and deductibles both rose 7% compared with 2019 levels.

Two of the 10 physician-administered drugs that Medicare spent the most money on in 2018 have seen price increases this January, healthcare research firm 3 Axis Advisors found. While providers may not pay the sticker price for drugs in Part B, beneficiary cost-sharing is tied to list prices.

Merck instituted a price increase of 1.5% for Keytruda, the second-highest expenditure Medicare Part B drug in 2018. Bristol-Myers Squibb increased the price for Opdivo, a drug used to treat small cell lung cancer, by 1.5%. Opdivo was the third-highest Part B expenditure drug in 2018.

More price hikes could come later in the month as drugmakers delay customary price hikes to avoid scrutiny. Drugmakers can increase prices at any time.

GoodRx, a company that helps consumers find lower prices on medicines at pharmacies, noted that the average January 2020 drug price increase so far is 5%, compared with 5.2% in 2019 and 8% in 2018.

The Medicare Payment Advisory Commission reported in June that two-thirds of Medicare Part B drug spending growth between 2009 and 2016 was attributable to prices, including price hikes on existing drugs and the launch prices of new drugs.

Even though price increases seem to be moderating in recent years, research by a not-for-profit run by 3 Axis co-founders showed launch prices for new brand-name drugs have risen significantly since 2006, according to one of the co-founders, Antonio Ciaccia.

“Our research has shown that launch prices are what have been growing while the de-emphasizing of increases on pre-existing drugs has occurred,” Ciaccia said.

Top House and Senate lawmakers used the 2020 price hikes to push their colleagues to pass major drug-pricing legislation this year, including measures that could reduce spending on physician-administered drugs.

Senate Finance Chair Chuck Grassley (R-Iowa) tweeted on Thursday to promote a policy that would force drugmakers to pay back Medicare for price hikes that outpace inflation in Medicare Parts B and D. That policy was included in legislation he authored with Finance ranking member Ron Wyden (D-Ore.), but it has proved a nonstarter for some Senate Republicans who view the policy as a form of price controls.

A preliminary analysis by the Congressional Budget Office estimated that the Grassley-Wyden inflationary rebates in Medicare Part B would save the federal government $10.7 billion over a decade. A similar policy for retail prescription drugs has estimated savings of $57.5 billion, as retail drug spending makes up a much larger portion of overall Medicare spending.

House Speaker Nancy Pelosi (D-Calif.) also used the price hikes to call for passage of her drug price negotiation bill. House Democrats’ proposal includes an inflationary rebate policy similar to the Grassley-Wyden bill, though prices are indexed to 2016 prices instead of 2019 in the Senate legislation.

The Campaign for Sustainable Rx Pricing, which includes members such as the American Hospital Association, the Federation for American Hospitals, Kaiser Permanente and several insurers, called for legislative action to address drug prices in response to the 2020 price increases.

“With an election approaching, the clock is already ticking. Lawmakers, in both parties, will need to work diligently to deliver relief for American patients,” CSRxP executive director Lauren Aronson said.

An HHS spokesperson said the Trump administration “remains steadfastly focused on lowering drug prices even further and ending foreign free-riding.”

The administration has not yet proposed a demonstration that would tie payment for some Medicare Part B drugs to prices in foreign countries. The policy has been under review at the Office of Management and Budget since June 2019.