January is in the books

The first month of 2022 is officially in the rearview mirror. While The Book of Boba Fett has helped push these drug pricing nerds through the bitter Ohio cold, unfortunately, COVID-19 is still here, inflation is still holding strong, and while we haven’t quite joined the great resignation yet, we can’t help but feel like the more things change the more they stay the same.

With that in mind, we figured it was the perfect time to sit inside where it’s warm, and assess what changes in brand drug list prices we see now that January is in the books. January is typically the busiest time of the year for brand drug price increases, typically generating a ton of buzz and vitriol. But far too often, the hot takes only scratch the surface and are devoid of context and nuance. While we don’t have all of the nuance that we’d like – thanks to the tremendous secrecy and lack of transparency surrounding granular net pricing and utilization data – we do have a lot of seasoning to add to the discourse.

So break away from your endless speculation of Grogu’s selected path, pour yourself a snort of spotchka, and find yourself a cozy spot as we unpack the bevy of activity from January’s brand drug list price changes.

Disclaimer

In the U.S., drug prices can be quantified in many different ways. There are many pricing benchmarks that represent a variety of ways to determine a drug’s price, and it can differ significantly from standard to standard, based on which layer of the drug channel the price is derived from, and based on whether or not that price accounts for price concessions.

There are many that take issue with analyses that rely on any singular benchmark, either because of the benchmark’s lack of completeness or simply that they don’t like the picture that that one benchmark paints. The truth is that since an overwhelming majority of the members of the prescription drug supply chain expose purchasers to varying degrees of the drug’s cost (see: price discrimination), any analysis of drug pricing is ultimately an exercise in minimizing imperfection.

So whether it’s the analysis below, or others you find here at 46brooklyn, or others you find elsewhere, understand that context and methodology have significant importance when evaluating what you’re seeing. We try our best to provide that necessary framing, but in case we ever fall short, we always will provide data sources and explain how we do it, so aspiring nerds can seek answers on their own.

With that said, our takeaways in this report are derived from our Brand Drug List Price Change Box Score. Full data sources and methodology can be found on that dashboard page, where you can do more data digging for yourself. Please remember that these prices are based on wholesale acquisition cost (WAC), which as you can see from our new glossary, is the list price paid by a wholesaler, distributor, and other direct accounts for drugs purchased from the wholesaler's supplier. It is a “sticker price” that does not reflect the growing pot of rebates and discounts that drugmakers shave off the top in exchange for coverage. But that doesn’t mean it can’t have a role in what people pay for drugs, particularly during the start of the year when deductibles reset (which often exposes people completely to a drug’s list price).

January 2022 vs. the field

In comparison to last year, which if you weren’t paying attention saw the highest number of brand price increases since 2018, January 2022 was more muted. In January 2022, there was a net (combined increases and decreases) of 852 brand products that took a price increase. This is down 9% from the 936 observed in 2021. That said, the number of brand price increases in January 2022 was higher than the number taken in 2020 (n=761) and 2019 (n=772). All of this trending is contextualized in Stat Boxes #1 & #2 within our Brand Drug List Price Change Box Score visualization (Figure 1).

**Figure 1**
*Source:* *Elsevier Gold Standard Drug Database, 46brooklyn Research*

We of course have no way of knowing what direction 2022 will take over the coming months, but based upon January alone, it seems like it’ll be more of a 2021 experience than a 2020 one based upon the above. We say this because if we build a forecast of 2022 based upon data from 2019 through the end of January 2022, using the data contained in Stat Box #1, our current best guess (at a 95% confidence interval) is that there will be 1,168 price increases in 2022 (Figure 2), which is closer to 2021’s total of 1,266 than 2020’s total of 1,058 (and nearly equal to the amount of price increases taken in 2019). Of course, the delta between the two isn’t all that significant and there are likely a variety of factors to the market beyond simple time series and past behavior that are needed to make an accurate prediction. Nonetheless, this is one way to get a flavor of what could unfold the rest of the year using prior trends.

**Figure 2**
*Source:* *Elsevier Gold Standard Drug Database, 46brooklyn Research*

Participants in January brand price changes

The manufacturers

A total of 132 drugmakers (based upon labeler name) had at least one brand product within their portfolio take a price increase in January 2022. They include some of the largest companies in the drug manufacturing space, at least as measured by the Fortune 500, as they included the likes of AbbVie (Fortune rank #68), Bristol-Myers Squibb (#75), Merck (#65), and Pfizer (#77). In Figure 3 below, we’ve reimagined Stat Box #7 to hopefully better contextualize the impact of these companies activities. The size of the bubbles reflects the amount of money (pre-rebate) the Medicaid program spent on the drugs these companies have increased the prices on in 2022 (e.g., $5.1 billion total on AbbVie’s brand drugs taking a price increase), while the shade of blue represents the average price increase of their products that saw changes in January 2022.

**Figure 3**
*Source:* *Elsevier Gold Standard Drug Database*, *Data.Medicaid.gov, 46brooklyn Research*

A complete list of companies, including individual drug price changes, can be found upon reviewing Stat Box #7.

The individual therapeutics

Products taking price increases cover a wide variety of drug classes and indications. We assess the gross impact of the brand price increases using utilization from Medicaid programs (via CMS State Drug Utilization Data), which suggest the following drugs are most likely to have the biggest impact (in terms of total dollars spent by us all) in the coming year thanks to their January price increases (Figure 4).

**Figure 4**
*Source:* *Elsevier Gold Standard Drug Database*, *Data.Medicaid.gov, 46brooklyn Research*

Humira’s price increase is the highest in Figure 4 and above what we might consider “typical” for 2022 based upon our prior review of Stat Boxes #3 & #4. The price increase may reflect its dominance in the space, as Humira has arguably been the top selling brand drug over the last decade, or may reflect a last-hurrah before it faces likely biosimilar competition in the near future. Similarly, Biktarvy and Vyvanse’s price increases might reflect their dominance in the HIV and ADHD markets respectively, or may be related to potential competition coming down the pipeline in those drug classes (HIV and ADHD pipeline drugs).

All this is largely baseless speculation on our part. And, of course, the real impact of any drug’s price change will be dependent upon a variety of factors, not the least of which is the rebates associated with the drug (if you’re a health plan sponsor) or the amount of coinsurance you’re asked to pay to obtain it (which tends to be highest in January thanks to resetting deductibles).

Quantifying the movement of drug prices

While only time will tell the significance of any of the pricing movement we’ve discussed thus far, we do see encouraging behavior in reviewing Stat Boxes #3 & 4 (Figure 5), as they are largely following prior year trends. In these boxes, we attempt to quantify the typical (i.e., via median and weighted average) price change behavior of drugs. Based upon what we see, the degree of brand price changes year-over-year continue to trend largely flat at ~5%, .which as you can see are low points for the decade.

**Figure 5**
*Source:* *Elsevier Gold Standard Drug Database*, *Data.Medicaid.gov, 46brooklyn Research*

Of course, simply taking a flat line increase year-over-year may not be the greatest news at this point thanks to our friend compound interest. Because brand drugs have taken significant price increases over the last 10+ years, even a flat percentage increase year-over-year can add significant costs to the typical brand drug. As seen in Stat Box #6, the pre-rebate WAC of a brand drug with a price change (based on Medicaid utilization trends) has never been higher (currently at $1,061 in 2022). But then again, it may be too early to get a full sense for how 2022 will play out (for example, we still don’t have prices for the new COVID-19 pills, and who knows if they’ll take a price increase this year after they’ve more fully launched).

The most interesting price changes

In case any of the above takeaways have you singing the blues, it’s not all bad news at the start of January. In fact, we think that some of the most interesting pricing behavior at the start of January isn’t all those companies and drugs that have taken price increase – they do that every year. Rather, some of the most interesting price changes are the drugs which took price decreases. Figure 6 identifies these stand-outs for us to inspect a little closer.

**Figure 6**
*Source:* *Elsevier Gold Standard Drug Database*, *Data.Medicaid.gov, 46brooklyn Research*

Auvi-Q (epinephrine) is used to treat life-threatening allergic reactions along the same lines as the far more often discussed EpiPens. Supply issues have plagued the product over the years, perhaps limiting its ability to compete with EpiPens. It is certainly surprising not to see any sales of the product in Medicaid last year, given that roughly half of all covered lives in Medicaid are children, some of which likely need access to emergency anaphylaxis treatment. Nonetheless, a hair-cut in the drugs price of 88% should hopefully help those who chose to buy the product. Perhaps a welcome retreat from prior pricing controversy?

Aduhlem (aducanumab-avwa) was arguably the one of the most talked about therapeutics at the end of 2021. As a medication indicated to treat Alzheimer’s, many raised concerns about the cost to the Medicare program with the drug’s approval, particularly given its initial price tag of $56,000 and its questionable value. However, that scrutiny may have been worth it as the drug has taken a nearly 50% price decrease at the start of 2022. This is noteworthy for a couple of reasons not the least of which is the fact that it is nearly unprecedented. Novel therapeutics don’t take price decreases – basically ever, as our dashboard shows – and certainly not within the first year of launch. That said, we can’t help but feel that there is more to this price decrease than meets the eye. The typical narrative with high-priced drugs is that they are offset to some degree by a rebate. For drugs with questionable efficacy, clinical merit, or even facing robust competition, the rebate may grow quickly in an effort to entice groups to cover their product. So why did Biogen discount the up-front cost of Aduhlem rather than increasing the back-end rebate? While we can only speculate, we can’t help feeling that it was likely due to the fact that Aduhlem isn’t your typical outpatient drug, but rather a provider-administered drug (i.e., you have to go to a clinic to get it). As a result, “rebates” as we normally think of them may not have helped Biogen entice coverage and so they took the oft overlooked approach of lowering their list price. Given Medicare’s recent announced Medicare decision for coverage with evidence development for Aduhelm, only time will tell if this price reduction helps with coverage.

Micardis (telmisartan) and Micardis HCT (telmisartan HCT) are medications used to treat high blood pressure. They’re largely insignificant in this update, because both are brand-name medications that have generic alternatives. As a result, most everyone who is using them has likely captured greater savings with the use of the generic and won’t benefit from a price decrease of the brand at this time.

Finally, Admelog SoloStar and Admelog (insulin lispro) are insulins used to treat diabetes. Admelog was approved via a unique pathway by the FDA as a “follow-on” product using safety and effectiveness data from a product of a different drug manufacturer (i.e., Humalog). So although the generic name for both Admelog and Humalog is “insulin lispro”, Admelog is not really a “generic” for Humalog. Nonetheless, its pricing is of great interest. In fact, last year was a very interesting year for insulin prices in general. To start, there was the United States Senate Finance Committee report on insulin, which revealed many of the secrets to insulin prices. Perhaps most revealing was that insulin competition was fierce, with drug manufacturers paying massive price concessions to health plans and pharmacy benefit managers (PBMs) that were often more than half of the actual list price of the product. Of course, these price concessions were not at the point-of-sale, like we just observed with Aduhelm, but rather massive, after-the-fact rebates (because most business’ prefer a higher up front cost, right?). But beyond those revelations, there was also the approval of the first interchangeable, biosimilar for insulin (i.e., the first product that would function truly like a “generic” for an insulin). That announcement was quickly met with a large bucket of cold water when it became clear that the manufacturer would actually launch two versions of it’s product – one whose price acted like a typical insulin (i.e., high price with big offsetting rebates), and the other that is lower in price (but likely not have those juicy rebates). It did not take long for those tracking this behavior to notice that the largest health plans seemed to prefer the typical high-price insulin product to the lower one. More money from sick people. So as we said in the beginning, the more things appear to change, the more they might actually just stay the same.

What have we learned?

We find ourselves with a compulsion each year to monitor January brand drug list price increases. If drug pricing was a jigsaw puzzle, the list prices are arguably the corner and border pieces that frame up the entirety of the picture. That compulsion was made easier as we were snowed in at the start of February, but even so, this annual review gives us an opportunity to learn from the past.

And although a reliance of past indicators being predictors of future performance has us guessing that 2022 will be more like 2021 than we might care for, we are encouraged by some of the drug pricing movement we reviewed in this report. Auvi-Q, Adhulem, and Admelog’s pricing behavior offers some real drug pricing relief for therapeutics that have gotten a lot of attention over the last decade (i.e., epinephrine autoinjectors and insulins). While the overall impact of these drugs is likely to be small in the face of the numerous other price increases we’ve chronicled here, if you’re a patient in need of anaphylaxis treatment or blood sugar control, you perhaps have more of a reason to hope for drug pricing relief in 2022 than in years past. If nothing else, brand drug prices are certainly something we’ll continue to tune into each month (along with the generics too) as we incorporate our ongoing analyses into our perpetual Star Wars binging.

Development (and maintenance) of our Brand Drug List Price Change Box Score visualization and the accompanying analysis was performed by 3 Axis Advisors LLC (“3 Axis”) and supported by Arnold Ventures. The 3 Axis team felt strongly that the information available within the visualization should be freely available in the public domain, and worked with Elsevier to get the end product to a point where it could be shared publicly. As such, the work is able to be donated and provided freely to the public through 46brooklyn Research. 3 Axis Advisors / 46brooklyn Research is grateful to Arnold Ventures for its support, and even more grateful for its shared desire to bring radical transparency to the very opaque U.S. pharmaceutical marketplace.

Shout-out to Jake Zuckerman at the Ohio Capital Journal for doing one of the better jobs we’ve seen of illustrating the collateral damage of our nation’s drug pricing conundrum through the lens of a patient struggling to afford their insulin and the other medications and products needed to help them manage diabetes. As highlighted in the above report, for some, the list prices for medications are very real.

Examining the first month of 2022 brand drug price increases