Fact Check: Manufacturers Set High Drug Prices and Prevent Competition - AHIP

Recent media coverage on high drug prices continues to obscure the primary role drug manufacturers play in the high cost of prescription medications.

Here are the facts:

• 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.
• 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.
• 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.
• More than 22 cents of every dollar spent on health insurance premiums goes to pay for prescription drugs – more than any other individual category.
• A recent 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."
• Research found that pharmaceutical companies filed more than 140 patent applications on average per drug.
• 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.
• Nearly 60% of voters name pharmaceutical companies as most responsible for rising prescription drug prices.
• The largest drugmakers in the United States spend just 22 cents out of every dollar on research & development, 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.

Pharmaceutical manufacturers control their drug prices, and they alone can lower them for Americans today. Instead, they continue to raise prices year after year—even several times a year—making health care more expensive for everyone.

Health insurance plans remain committed to keeping prescription drugs as affordable as possible by incentivizing the use of lower-cost, clinically equivalent generics and passing the value of negotiated discounts to patients through lower premiums and drug costs, and saving millions of dollars for patients every day.

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