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New Drug Prices Spiked In 2023 As Biden Admin Seeks To Keep Costs Down

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Pharmaceutical companies set median starting list prices 35% higher in 2023 than the previous year, despite the Biden administration’s ongoing efforts to tamp down on surging costs, Reuters reported Friday.

The median list price for a drug being placed on the market, many of which were for rare diseases, was $300,000 in 2023, which is up from a median price of $222,000 in 2022, according to an analysis by Reuters of 47 drugs. The Biden administration has made it a goal to tame drug prices, announcing steps like imposing automatic rebates to Medicare for drugmakers that raise their prices faster than the rate of inflation, which does not cover the starting list price.

“We created a lot of incentives for innovation for rare diseases and the market responded,” Dana Goldman, director of the USC Schaeffer Center for Health Policy & Economics, told Reuters. “The hope is that eventually we will see some therapeutic competition in this space and bring prices down.”

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The increase in median prices partially represents companies investing in more expensive and rarer treatments for diseases like muscular dystrophy, meaning there are fewer potential customers to recoup costs on, according to Reuters. The most expensive drug added to the market in 2023 was Veopoz for CHAPLE disease at $1.8 million a year, while the least expensive was the diabetes drug Brenzavvy with a yearly price of $576.

Biden first announced a plan in November 2021 to lower drug prices, including letting Medicare negotiate prices, imposing penalties on companies that raise their prices too quickly, and putting a cap on the amount seniors and people with disabilities have to pay out-of-pocket. Provisions to lower drug prices were later included in the Inflation Reduction Act, which was signed in August 2022.

The Biden administration unveiled a list of ten drugs in August 2023 that will be required to negotiate prices with Medicare under the threat of an up to 95% sales tax if they do not cooperate. The negotiations are currently ongoing and are expected to take effect in 2026.

Some experts argue that imposing restrictions on how quickly drug manufacturers can raise prices leads pharmaceutical companies to place their initial list price higher so that they do not have to raise prices as quickly, irrespective of what customers actually pay through insurance.

The White House did not immediately respond to a request to comment from the Daily Caller News Foundation.