THE COWEN INSIGHT
The majority of respondents continue to expect U.S. brand drug prices to rise over the next three years, but at a low-single-digit rate. This is similar to last year, but a deceleration from past decades.
The political makeup of the U.S. federal government does not correlate with brand drug price changes, and the impact of legislation currently debated by Congress is unclear. Price controls are unlikely. Projected biosimilar usage may be trending upward.
Survey Of Buyers Captured One-Fifth Of U.S. Retail Drug Purchases
In January, Cowen conducted its 27th Annual Drug Pricing/Purchasing Trends survey of U.S. buyers to gain insight into the direction of U.S. drug prices over the next 3 years. Our survey results are based on responses from 26 HMOs, PBMs, and hospitals. Collectively, they purchased $40B+ of drugs in 2021, or about one-fifth of total U.S. retail drug purchases.
Low-Single-Digit Rise in Brand Acquisition Prices Projected
This year’s sample of purchasers anticipate that brand drug acquisition cost per unit will increase by an average of 7% over the next three years. This is slightly higher than last year’s forecast, but still maintains the reversal of a decades-long trend for double digit increases. Eight percent of respondents attribute a substantial (75%) portion of the anticipated increase over the next three years to a mix shift to higher-priced, newer therapies vs. 12% last year. Average generic drug acquisition cost per unit is expected to increase slightly over the next three years.
Biosimilar Trends May Be Exhibiting a Slight Upward Inflection
Respondents indicate that an average 32% price discount would be needed to switch from a brand to a biosimilar product, similar to last year’s response. For molecules for which one biosimilar is available, an average 40% of dispensed prescriptions are likely to be biosimilar substitutions in three years, up from 35% last year and 25% in the year prior. This projection rises to 54% when three biosimilars are available, similar to last year, but perhaps stabilizing at a higher percentage than in prior years.
Price Controls Still Unlikely in Next Three Years
Seventy percent of respondents believe there is a 10% or less chance that price controls on pharmaceuticals will be implemented in the U.S. in the next three years (vs. 31% of respondents last year). Zero respondents believe there is a 50%+ chance (vs. 8% of respondents last year). When asked how the likelihood of price controls has changed in the last five years, 46% indicate no change, 46% believe the likelihood has increased somewhat, and only 8% feel the likelihood has increased significantly. Twenty-four percent thought the likelihood had increased significantly when asked last year.
Drug Prices Have Increased Each Year for A Quarter Century
Our survey has correctly predicted the direction of drug prices for 26 years, through multiple pricing scares, reform initiatives, and election cycles. Investor sentiment and political rhetoric have swung significantly over this time, but the expectations of drug buyers and realized price increases have remained positive for 26 years. This year is largely in line; the majority of respondents (22 out of 26, representing >$42B in annual drug spend) expect drug prices to rise over the next three years. We believe that drug prices have continued to increase because innovative drugs add real value to patients. As long as pharma companies continue to deliver these innovative drugs, we see no change in the upward trend in prices.
Get the Full Report
If you’re already a member of our Research portal, log in.Log In
If not, reach out to us directly for more information.