46brooklyn’s 2024 Midyear Drug Price Changes Report
The CLIFF NOTES
As researchers and analysts, we at 46brooklyn have made it our goal to provide insights into U.S. drug pricing data available in the public domain based on the figures we’re able to gather and evaluate. Today’s report covers the drug pricing activity over the month of July 2024, with insights coming principally from our updated Brand Drug List Price Change Box Score, NADAC Drug Pricing Dashboard, and NADAC Change Packed Bubble Chart.
For seasoned industry watchers, it’s well known that July is historically the second biggest month of the year for brand drug price changes. It’s been that way for years. Last year was no different, and this year maintains the tradition. Today’s report will unpack all the numbers and context.
As way of a quick overview, there were 167 brand drug list price increases in July, with price changes impacting $1,888 (Demerol) on the low end of gross prior year Medicaid expenditures (PYME) up to $314 million (Revlimid) on the much higher end. Typically, we see prices changes all over the board, some of which can be just a few hundred dollars of impact whereas others are hundreds of millions of dollars. In July, some medications have as low as a 0.4% price increase whereas others have an increase of up to 15%. Depending on the price of a medication, even a small increase of 0.4% could be substantial enough to be thousands or even millions of dollars compounded over time.
There were two brand medications in July that took a list price decrease, the most significant of which was Xenical, an oral medication, which took a decrease of 42.5%.
Some of the biggest and/or most interesting movers to take note of for July 2024 were:
Revlimid oral capsule (7.0% increase; $314 million PYME)
Xofluza oral tablet (6.1% increase; $1.3 million PYME)
Paxlovid oral tablet (3% increase; $63 million PYME)
ZTlido Transdermal patch (3.1% increase; $66 million PYME)
Annovera Vaginal insert (5.0% increase; $10 million PYME)
Apretude suspension for injection (1.5% increase; $50 million PYME)
Cabenuva suspension for injection (1.5% increase; 197 million PYME)
Ilaris solution for injection (7.0% increase; $135 million PYME)
Rhophylac solution for injection (0.1% decrease; $1.9 million PYME)
Xenical oral capsule (42.5% decrease; $1.3 million PYME)
Bear in mind that as you read those numbers, that they are the prices before drugmaker rebates, which as we know are growing significantly over time and are at their largest amounts in the Medicaid programs.
On the generic side of the coin, year-over-year (YoY) oral solid price deflation has hit around 26.5%. Since April, national average drug acquisition cost (NADAC) prices have deflated a good deal more than they have over last year, although the month-over-month changes can be a little all over the place as of late.
The 4th of July fireworks may have created a spark or two, but the drug pricing changes for July are creating a big bang. Looking at some of the price increases for brand name medications (i.e. Fluzone Trivalent, Xofluza, Paxlovid), it’s almost as if pharmaceutical manufacturers are anticipating an uptick in the prescribing of their medications as we head into cold and flu season. If you want more of the details regarding drug pricing changes in July, rather than just the cliff notes, read on.
What we saw from brand-name medications in July
1. A small number of brand drug list price changes
There were a total of 167 brand-name medications that saw wholesale acquisition cost (WAC) price increases in July and two list price decreases, for a net of 165 total price increases, which is all featured and contextualized in our Brand Drug List Price Change Box Score.
List price changes ranged from -42.5% to +15% and impacted approximately $4.7 billion in prior year gross Medicaid expenditures (PYME). Recall that we use PYME as a rough measure of the drug’s significance to the U.S. market. Medicaid being one of the largest payers nationally means that the amount of money Medicaid pays for a medication is a rough signal of its overall value to us collectively. This July’s PYME is the roughly four-times greater than what we saw in June (which, to be fair, is to be expected as July tends to be the second highest month in terms of WAC price changes [January is the month with the most historically]), so the brand name medications taking price changes are a little more impactful this month.
2. Brand price trends over time
To help contextualize brand-name drug list price increase behavior, we find it beneficial to review past trends. In comparison to the data from prior months of July, this year seems to be in-line with more recent years. July 2023 had 164 combined (i.e., increases net of decreases) brand list price increases, July 2022 had 194, July 2021 had 85 and July 2020 had 74.
Figure 1
Source: Elsevier Gold Standard Drug Database, CMS State Drug Utilization Data, 46brooklyn Research
Moreover, when further examining our brand drug box score visualization, of the drugs that took increases so far this year, the median price increase for 2024 is now calculated at 4.5% – a decrease from the 4.9% that had been holding steady for much of 2024. On a weighted basis, there also was some movement, with the number now being reported as 1.2% (up from 0.8%) (as shown in Figure 1).
This change in our weighted price figure is a signal that the individual drugs that saw price changes in July were more impactful (affecting the yearly average impact of price changes) relative to the drug price changes that have already occurred throughout the year. While these July price changes actually impacted the overall average in a way we haven’t seen for a few months, they still dwarf the impact of the January price changes.
3. Brand drug list price changes worth taking note of in May
While we have thus far focused on the aggregate brand picture, next we identify specific brand drugs worth taking note of in a couple different ways. Primarily, we look for medications with a lot of prior year gross Medicaid expenditures (PYME). We next look for drugs with large pricing changes (+/- 10%). And finally, we look for drugs that are interesting for us either because we’ve previously written on them, they’ve recently been in the news, or because we find them of unique clinical value. This month, when looking for these drugs in the brand arena, we found several worth mentioning based upon these reasons:
Anti-viral Medications
Xofluza (baloxavir marboxil) is a one-dose antiviral flu treatment that needs to be started within the first 48 hours after symptoms develop in patients 12 years of age and older. This medication took an increase in WAC of 6.1% impacting $1.3 million in gross prior year Medicaid expenditures (PYME).
Paxlovid (nirmatrelvir/ritonavir) is an antiviral medication that is used to treat mild-to-moderate COVID-19 in adults that needs to be started within first 5 days of illness. This product saw an increase in WAC of 3%, across $63 million in PYME.
Apretude (cabotegravir) is a long-acting antiviral injectable medication used for pre-exposure prophylaxis (PrEP) for the HIV virus. This medication experienced an increase in WAC of 1.5%, impacting $50 million in PYME.
Cabenuva (cabotegravir/rilpivirine) is long-acting antiviral injectable administered every other month for the treatment of HIV. When looking at recent reports on HIV infection, the trends over time show that new HIV infections have decreased 12% from 36,300 in 2018 to 31,800 in 2022. A decline in infection numbers has been credited to many factors, including PrEP medications like Apretude mentioned above. This medication saw an increase in WAC of 1.5%, impacting $197 million in PYME.
Autoinflammatory Disease Medications
Ilaris (canakinumab) is an injectable medication used for Still’s disease, periodic fever syndromes, and Gout flares. It had a 7.0% increase in WAC, impacting $135 million in PYME.
Birth Control
Annovera (segesterone acetate and ethinyl estradiol vaginal system) is a reusable 13 cycle (AKA annual) vaginal birth control ring. It had a 5.0% increase in WAC, impacting $10 million in PYME.
Cancer Medications
Revlimid (lenalidomide) is a medication used to treat multiple myeloma, myelodysplastic syndromes, mantle cell lymphoma, follicular lymphoma, and marginal zone lymphoma. This medication experienced an increase in WAC by 7.0% impacting $314 million in PYME.
Opdivo (nivolumab) is a medication used to treat adults with certain types of cancer. This medication experienced a 2% price increase, impacting $198 million in PYME. Opdivo is an injectable medication infused over time by a healthcare professional (generally in an outpatient setting). As our discussion on Cardene IV last month generated a good amount of interest, we figured selecting this medication (which is much larger than Cardene IV) would be a good one to dive into the medical billing sidebar for this month’s report. However, we ended up writing a whole mini-report on this drug so you’ll have to wait for next week for that report to drop. Stay tuned.
Neuralgia Medications
Ztlido (lidocaine topical system) is topical patch used for the treatment of pain associated with postherpetic neuralgia (PHN). Approximately 1 in 3 people in the United States will be affected by shingles at some point in their life. After the initial shingles rash goes away, around 10% to 18% of people will get PHN, a pain that can frustratingly last weeks to years. Notably this medication had a 3.1% increase in WAC, impacting $66 million in PYME.
Bear in mind that as you read these brand drug numbers, they are the prices before drug maker rebates are accounted for, which as we stated prior are growing significantly over time and are at their largest amounts in the Medicaid and 340B programs. While these list prices are bloated and intended to be negotiated, for those who are underinsured, uninsured, or in high-deductible health plans, these “fake” list prices become very real.
Of course, our update doesn’t end with brand medications. While brand drugs represent the majority of payer costs, patients overwhelmingly take generic medications, which means we cannot overlook what is going on with them.
What we saw from generic medications in June
4. A favorable, unweighted price change picture
Each month, we start our evaluation of generic drug price changes by looking at how many generic drugs went up and down in the latest month’s survey of retail pharmacy acquisition costs (based on National Average Drug Acquisition Cost, NADAC), and compare that to the prior month. Basically, the quick way to read Figure 4 below is to look for orange bars that are taller than blue bars to the left of the line, and exactly the opposite to the right of the line. That would indicate a good month – more generic drugs going down in price compared to the prior month, and less drug prices going up.
Figure 4
Source: Data.Medicaid.gov, 46brooklyn Research
As can be seen in Figure 4, many more drugs decreased in cost this month compared to the prior month. Collectively, there were about 7.4 NADAC price decreases for every one increase in July 2024. This is a HUGE difference to what we are used to seeing in this area, which typically hovers around ~1.75, give or take a few decimal points. While a good deflationary signal, we take this unweighted price change analysis with a grain of salt. If a bunch of under-utilized drugs took price decreases, then the overall effect can be minimal (except to those potentially taking the drug). To really make heads or tails of all of these pricing changes, we need to add a weight to these changes.
5. Weighted Medicaid generic drug costs come in at $477 million deflation
While you can track each individual drug’s NADAC over time at our NADAC Drug Pricing Dashboard, the purpose of our NADAC Change Packed Bubble Chart is to apply utilization (drug mix) to each month’s NADAC price changes to better assess the impact. CMS just published Q4 2023 Medicaid State Drug Utilization Data, so we’ve moved to just 2023’s drug mix to arrive at an estimate of the total dollar impact of the latest NADAC pricing update. As a reminder, we’re choosing the last full-year picture available in order to remove variances in drug mix from this equation (and focus just on the role that NADAC price changes have over time). This helps quantify what should be the real effect of those price changes above from a payer’s perspective (in our case Medicaid; individual results will vary). Said differently, if a drug that is hardly ever utilized takes a 50% decrease, it doesn’t matter as much if a drug everyone takes increases by 5% (the inverse of this is what we observed at the start of the year with the brand name insulin price decreases [see our January 2024 report]).
The green bubbles on the right of the Bubble Chart viz (screenshot below in Figure 5) are the generic drugs that experienced a price decline (i.e. got cheaper) in the latest NADAC survey, while the yellow/orange/red bubbles on the left are those drugs that experienced a price increase. The size of each bubble represents the dollar impact of the drug on state Medicaid programs, based on their utilization of the drugs in the most recent trailing 12-month period (i.e. bigger bubbles represent more spending). Stated differently, we simply multiply the latest survey price changes by aggregate drug utilization in Medicaid over the past full year, add up all the bubbles, and get the total inflation/deflation impact of the survey changes.
Figure 5
Source: Data.Medicaid.gov, 46brooklyn Research
Overall, in June, there was just over $17 million worth of inflationary drugs, but that was offset by a GIGANTIC $494 million of deflationary generic drugs, netting out to approximately $477 million of generic drug cost deflation for Medicaid. While certainly a big number, bear in mind that last month there was approximately $404 million of generic drug inflation, so we’re more or less back to where we were two months (plus a little gain). NADAC’s up and downs persist, as survey response inconsistency rolls on.
And while month-over-month changes are interesting, they inevitably lead to questions about how year-over-year (YoY) is trending, which leads us to our next analysis.
6. Year-over-year generic oral solid deflation hits 26.5%
Ever since June 2020, we have been tracking year-over-year (YoY) deflation for all generic drugs that have a NADAC price. We once again weight all price changes using Medicaid’s drug utilization data. This month, deflation on oral solid generics and all generics was at 26.5% and 22.4%, respectively (Figure 6). If you are a purchaser of generic drugs, this deflation is ideal, as it means costs to purchase are declining. This month’s deflation is more in line with April and May rather than last month’s June value.
Figure 6
Source: Data.Medicaid.gov, 46brooklyn Research
7. Top/notable generic drug decreases
The drug price decrease bubble this month looks like it might explode with how many medications took a decrease in price. After reviewing the various sizes and colors that comprise this month-over-month decrease, there are some notable decreases.
Some of the biggest decreases are the smoking cessation medication(s) varenicline 1 mg & varenicline 0.5mg, which took decreases of -31.7% and -53.1% respectively. We are also still seeing ADHD medications decreasing in price this month, with dexmethylphenidate ER 20 mg cap decreasing by -40.6%, as well as the opioid use disorder medication, buprenorphine/naloxone 8-2mg sublingual tablet decreasing by -22.3% and just might be the biggest bubble on the chart this month.
8. Top/notable generic drug increases
On the increase side of things, the most impactful increases of 20%+ were fluphenazine 10 mg tablet (59.0% increase), propanolol 10 mg tablet (43.8% increase), mercaptopurine 50 mg tablet (39.9% increase), metformin ER 1000 mg (36.4% increase), quetiapine 50 mg tablet (22.9% increase), and meloxicam 5 mg capsule (21.1% increase).
Fluphenazine is a repeat offender for us here at 46brooklyn, as we wrote about them three years ago in our August 2021 report when they came in with a 15% decrease in price. And if that seems like a lot of volatility in fluphenazine’s price (we talked about a decrease previously and are now talking about an increase), just remember that if we broaden our monthly view to an annual or even multi-year view, generic drug deflation for products is pretty well established.
Figure 7
Source: Data.Medicaid.gov, 46brooklyn Research
That’s all for this month! Come back next month to see what kind of drug pricing surprises the beginning of Fall brings.
Thanks to the board and staff of the Texas Pharmaceutical Initiative for inviting 46brooklyn CEO Antonio Ciaccia to provide insights into the PBM marketplace and how to best align incentives in the drug channel in order to maximize value on prescription drug spending.
Additional shout-out to Dr. John Marshall at Clinical Care Solutions for a discussion on PBM market dynamics and how they intersect with the field of oncology.