Pharmaceutical companies rang in the New Year as they usually do: raising prices on hundreds of medications.
According to research cited by Reuters, companies like Pfizer, Sanofi and Takeda will raise prices on more than 500 drugs in early January. Pfizer is leading the way, accounting for about 25% of all drug price hikes.
The insulin exception: Not all drug prices are going higher this year. The cost of insulin is dropping to a maximum of $35 per month for millions of Americans as of January 1, thanks to the Inflation Reduction Act, which Democrats pushed through Congress in 2022.
The law applies to Medicare beneficiaries, but the three major producers of insulin – Sanofi, Novo Nordisk and Eli Lilly – have announced their own discount programs to match the $35 cap for most patients.
The firms are also lowering retail prices on their insulin drugs. As CNN reports, Sanofi reduced the list price of Lantus by 78% starting January 1. Novo Nordisk lowered list prices of multiple insulin drugs by as much as 75%. And Eli Lilly said it would cut the price of Humalog and Humulin by 70%.
Responding to pressure – and new rules: The drugmakers are cutting insulin prices due to the new rules laid out in the Inflation Reduction Act, as well as increased pressure from the Biden administration and consumer advocates. Another factor is the 2021 American Rescue Plan, which requires drugmakers starting in 2024 to pay higher rebates on medications that have seen price increases in excess of the inflation rate.
The price cuts are expected to actually save the companies money overall as they avoid what could have been massive rebate payments under the new rules. Spencer Perlman of the consulting firm Veda Partners told CNN that the savings will total hundreds of millions of dollars. Eli Lilly, for example, is expected to avoid paying $430 million in Medicaid rebates this year thanks to its timely price cuts on its insulin drugs.
