The median annual price for new drugs approved in 2022 by the U.S. Food and Drug Administration was $222,003, according to a Reuters report published January 5.

This is a decades-long trend, as detailed in a June 2022 report published by JAMA Network. In 2008, the median new drug launch price was $2,115. In 2021, it was $180,000. Today, 47% of new drugs are priced at or above $150,000 per year.

Unfortunately, the problem is not just new medications. In 2020, JAMA Network reported that the average list price of 602 existing drugs increased 159% from 2007 to 2018.

Many of these drugs have been on the market for years and some for decades. So, why the continued price hikes?

Some hope that the Inflation Reduction Act of 2022 signed by President Biden in August 2022 might bring relief.

Section 11001 of the IRA enables the federal government to negotiate prices for prescription drugs covered under Medicare part B and D, requires pharmaceutical companies to pay the government rebates if prices rise faster than inflation, and caps out-of-pocket expenditures for participants of Medicare Part D.

The Congressional Budget Office estimates that the provisions will reduce government cost by as much as $237 billion over 10 years.

Unfortunately, most of the benefits of the IRA will not take place until 2026, as the price negotiation process will not begin until September 2023. Negotiated pricing for drugs covered under Medicare Part D will take affect 2026, and drugs covered under Part B will be impacted in 2028.

This is a long time to wait for relief, plus the negotiation process will probably have no impact upon new drug launch prices either. Medicaid drug rebates are calculated based on the average manufacturers price and not a negotiation like Medicare Part D.  This will continue to give drug manufacturers an incentive to keep new prices high.

In addition, the government will only be able to negotiate prices on a limited number of qualifying drugs: 10 qualifying drugs for 2026, 15 for both 2027 and 2028, and 20 for 2029.

To qualify for price negotiation under the IRA, a drug must be in the top 50 drugs that Medicare has spent the most on in the 12-month period prior to the beginning of negotiations. In addition, only drugs approved by the FDA for at least seven years and without a generic version on the market will qualify.

All of this greatly reduces the actual impact of legislation that sounded like a great idea in attempting to require the government and big pharma to negotiate in with each other in good faith. For now, most of us will still be stuck paying high dollar out-of-pocket fees for prescriptions.

In 2020, the average American spent $1,310 on prescriptions, which is up from $540 in 2000.  That may not seem like a lot of money, but these are the average costs when factoring in every citizen and not the costs paid by those with specific health conditions.

According to the Georgetown University Health Policy Institute, 66% of Americans use prescriptions every year. That rate increases with age and with a reduction in household income. For example, on average, a patient between 35-49 years of age will fill six prescriptions annually while the average patient over 65 will fill 20 or more.

Similar trends are reflected when looking at economic status. The average member of a household making less than $20,000 a year will fill 13 prescriptions, which is almost twice that of a member of a household making over $55,000.

It is the elderly and low-income households that are filling the largest number of prescriptions and, in turn, paying the most out of pocket. So, as drug costs continue to rise, it will be these populations who can least afford it that pay the highest prices.

Among older patients, 12% already admit to taking less than the prescribed amount due to cost and an estimated 22% of low-income patients have declined to fill one or more prescriptions due to economic challenges.

In 2015, the Kaiser Family Foundation reported that one in four Americans cannot afford their medications and 47% say prices are too high. Seven years later, we are still wrestling with the same problem.

A similar pattern can be seen in surveys about the number of adults in the U.S. who put off seeking medical care due to the costs. A recent Gallup report noted that the percentage of adults doing so reached an all-time high in 2022.

Yes, we need better antivirals, innovative chemotherapies and new cardiac medications. All of that is expensive to develop, but we also need these health care innovations to be affordable, otherwise lives could still be lost due to financial constraints.

Many of these medical breakthroughs were developed through the assistance of government grants and incentives. Therefore, we need to hold our elected officials accountable for finding solutions to make prescription drugs affordable, and the government needs to hold big pharma accountable for out-of-control drug pricing.

We need to do more than propose a negotiation program for a handful of drugs through legislation that includes more qualifications than a skyscraper full of lawyers. Most importantly, the pharmaceutical industry needs to open its eyes and take responsibility for the current problems by bringing prices down.

For many of our fellow citizens, this is a matter of life and death.

Editor’s note: This is the first of a two-part series. Part two will appear tomorrow.