Hefty Listing Price Of New Drugs For Cancer, Rare Diseases Put Pressure On Annual Hike For Older Drugs

New branded medicines are coming to market with ever-higher price tags as soon as the first day. Amgen Inc's (NASDAQ: AMGN) lung cancer treatment, Lumakras, carried a hefty price tag of $17,900 per patient monthly when it launched in 2021.

In December 2022, Mirati Therapeutics Inc (NASDAQ: MRTX) launched a lung cancer drug competing with Amgen at a 10% premium of $19,750 a month.

Previously, companies would consider whether to crack big price barriers when launching a drug, like $5,000 and then $10,000 a month. Many new drugs for cancer and rare diseases routinely exceed those price thresholds, often priced at over $20,000 monthly. 

Related: Newly Approved Drugs In US Command Over $200,000 On An Average.

The median starting price for a newly approved drug nearly tripled to $7,034 per patient monthly in 2022, from $2,624 in 2011, according to an analysis conducted for The Wall Street Journal.

Drugmakers say the prices reflect the clinical benefits the new drugs provide for patients. The companies say most people don't pay list prices because they offer rebates and discounts to employers, pharmacy-benefit managers, and insurers.  

The analysis included some new products, such as costly gene therapies. Most recently launched Eli Lilly And Co's (NYSE: LLY) Jaypirca for mantle-cell lymphoma costs at least $21,000 monthly or more than $250,000 annually, higher than the launch price for similar drugs.

One-time gene therapies from UniQure N.V. (NASDAQ: QURE) and Bluebird bio Inc (NASDAQ: BLUE) are priced at a whopping average of $3 million.

This launch-price inflationary trend for new medicines comes as new legislation pressures price hikes for older drugs. 

The U.S. Inflation Reduction Act of 2022 aims to curb drug costs. But the new law doesn't directly stop drugmakers from charging a high price for a brand-new drug at launch.

Among the other factors resulting in high prices at launch is the drug industry's increased focus on developing new medicines for diseases with a small patient population.

Image by Thomas Breher from Pixabay

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