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Fact Check: Manufacturers Set High Drug Prices and Undermine Competition


Published Jul 9, 2024 • by AHIP

Health insurance plans support competition and choice to help make the cost of prescription drugs more affordable for people and more sustainable for the country. Today’s staff report from the FTC overlooks PBMs’ key role in countering manufacturers’ pricing power and making prescription drugs more affordable for plan sponsors and the consumers they serve.

Any assessment of prescription drug affordability has to start with the root causes of high drug prices: Drug manufacturers often hold monopoly power over medicines and continue to prevent and undermine competition to keep drug prices as high as possible in the U.S.

For example:

  • Research has found that the median annual price among new drugs approved by the U.S. Food and Drug Administration (FDA) in 2023 reached $300,000, 35% higher than the previous year.
  • A 2023 analysis found that “anti-competitive patent abuse tactics used by big pharmaceutical companies cost U.S. consumers an additional $40.7 billion in prescription drug expenses in one year alone.”
  • More than 22 cents of every dollar spent on health insurance premiums goes to pay for prescription drugs – more than any other individual category.
  • Over the 2009–2018 period, the average price of a prescription for a brand-name drug more than doubled in the Medicare Part D program and increased by 50% in Medicaid.
  • A recent study found the top 10 brand name drugs in terms of “US net sales revenue in 2021” had a total of 1,429 patents or pending patents.
  • In the first two weeks of 2024, drug manufacturers “raised list prices on 775 brand-name drugs … by a median of 4.5 percent,” outpacing “the rate of inflation, which ticked up to 3.4 percent in December,” according to research from The Wall Street Journal and 46brooklyn Research.
  • The largest drugmakers in the United States spend just 22 cents out of every dollar on R&D, and a study from JAMA Network found “no relationship” between the price brand name drug makers set and the amount those companies invest in R&D.

About AHIP

AHIP is the national association whose members provide health care coverage, services, and solutions to hundreds of millions of Americans every day. We are committed to market-based solutions and public-private partnerships that make health care better and coverage more affordable and accessible for everyone.