New dashboard launched to track brand drug price increases
This is the way … To Analyze Brand Drug List Price Increases
It’s that time of year again.
No, we’re not talking about the time of year when you start slipping into your personal bubble suit as you head to Times Square to watch the ball drop. Nor are we talking about the time of year when we all mourn the fact that we must wait nearly a year for new episodes of the Mandalorian. Rather, we’re talking about the time of year when a deluge of yearly drug price increases hits the American public.
At the beginning of every year – 2016, 2017, 2018, 2019 – the price increase stories basically write themselves. When we first started our work, we always wondered where the media got all this data, and even though those list prices are missing the complete story of drug prices – which needs to include those massive, ever-growing rebates – we wanted to get that data … badly.
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We didn’t fully appreciate the media feeding frenzy that comes along with January drug price increases until exactly one year ago, when our co-founders – through consulting practice work at 3 Axis Advisors – got caught up in all of the excitement by pulling price increase data and tallying up the results to help make sense out of all the moving parts.
To our shock, after Reuters broke the first 2020 drug price increase story, we found the resulting stories about this work syndicated in countries as far away as China! While we still can’t figure out why China would care about U.S. drug price increases, this did at least cement the idea that this topic matters to people all across the globe and perhaps even beyond the Outer Rim. These start-of-the-year drug price increases may arguably be one of the most watched drug pricing events each year.
And right on queue, on December 31, 2020, those first of the year price increases hit the Reuters wire again. Wall Street Journal had a follow-up on January 1.
Going into this year’s drug pricing increase bash, we were determined to do things differently. For those of you that have been following us for some time, you already know we fervently believe that the lack of transparency in pricing across the pharmaceutical enterprise is the primary culprit for our American-made drug pricing crisis. Exposing how this all works, using data and visualizations, is put simply, the reason 46brooklyn exists. So, when it comes to the Super Bowl of drug pricing events, putting together another one-time analysis for the media without much detail and nuance just wasn’t going to cut it.
The problem is Wholesale Acquisition Cost, or “WAC”, the statutorily-defined list price benchmark directly set by manufacturers of brand name drugs, is proprietary and tougher to find than Luke Skywalker on Ahch-To. Now, there have been limited instances of state-required disclosures and federal legislative efforts that would fix this, but until something meaningful, all-encompassing, and timely passes, the list prices drugmakers set are hidden behind paywalls.
Stop for a minute and think about this. If you were shopping for a vehicle, would it be acceptable for you to have to cough up money to find out a vehicle’s MSRP? Absolutely not. Car buyers need to know the list price, at least as starting point to negotiate a fair purchase price. Yet we allow this opacity with our prescription drugs and then wonder why we have a drug pricing problem?
We digress.
If one wants to disclose changes in prescription drug list prices to the American public – which again, we believe we must do – one must get very creative to get around their hidden nature. So, that’s exactly what we did. We wrote reams of code to derive price changes on all brand name drugs from the raw WAC data reported by drug manufacturers into Elsevier’s Gold Standard Drug Database (GSDD). We then completely rebuilt our Brand Drug List Price Change Box Score for you, with several new features. Not only can you now look up the count and magnitude (i.e. percent change) of price changes by drugmaker, but you can see weighted price changes, based on Medicaid’s drug utilization of not only the drugs that experienced a price change, but all medications that a drugmaker sells into state Medicaid programs. This offers a much more complete picture on list price inflation across an entire drugmaker’s portfolio.
Gone are the days where you had to rely on limited, static articles to quantify (and provide context for) brand drug list price changes. Starting today, every WAC price change pushed through by brand manufacturers is available in the public domain within our new and improved Brand Drug List Price Change Box Score.
Put simply using the Mandalorian Creed, if you are trying to make better sense out of brand drug list price changes … This is the way.
The Brand Drug List Price Change Box Score
Mandalorians typically choose their words very carefully, meaning our verbose writing style (besides our “flash findings”) is distinctly un-Mandalorian. As such, out of respect to this theme, we must change our ways for this report. So, as much as it pains us to do this, we are not going to spend the next 10 minutes explaining the nuances of how this visualization works and how we built it. Instead, we’re just going to give you a very brief bullet-point summary of each “Stat Box” that comprises the Box Score.
Not to worry though, for those that are starving for more detail we’ve prepared a ~5,000-word Jedi text FAQ document that explores the inner workings of the dashboard and its accompanying database.
Stat Box #1: Cumulative WAC Price Increases by Week
Figure 1
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Stat Box #2: WAC Price Increases by Month
Figure 2
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Stat Box #3: Median Percentage WAC Increase
Figure 3
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
New brand product filter feature added to Stat Box #3 on January 5, 2021!
After releasing the dashboard on 1/2/2021, our friend Walid Gellad from University of Pittsburgh contacted us asking how one could view the historical price increase trend for a single drug. Frankly, we just flat out missed adding this critical function in our first go around building this tool. So, upon receiving the request, we quickly added this feature to Stat Box #3 and pushed it out with our January 5, 2021 morning update.
The only addition is a drop down filter at the top of Stat Box #3 from which you can select one or multiple drugs to view. Simply choose whichever drugs you want, and the chart will display the median percent increase for your selection. The left side of Figure 4 shows price changes for one drug (in this case, Revlimid Oral capsule), while the right side shows the median price increase for a group of drugs (in this case, all three Humira “products” … Humira Solution for Injection, Humira Crohns Disease Pediatric Starter Package, and Humira Psoriasis Starter Package).
Figure 4
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/5/2021
Note that we’ve set up the filter to only show “relevant values.” In non-Tableau language this means that if you select, say, Pfizer, from the drugmaker dropdown at the top of the visualization, the brand drug filter in Stat Box #3 will only show drugs manufactured by Pfizer. Hopefully this will make your drug level pricing research a bit easier.
To Dr. Gellad for suggesting this feature, THANK YOU! We’ll be getting in touch with you to send you some new 46brooklyn threads for your efforts! 😎
Stat Box #4: Weighted Average Percentage WAC Increase
Figure 5
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Important notes about Stat Box #4!
You may be wondering why the yellow line steps down in 2021, while the blue line does not. This is because the blue line takes the total inflationary impact of the 2021 price changes (which at the time of publication were only those changes on 1/1/2021) and divides that by spending on that same group of drugs. The yellow line instead divides the total inflationary impact of changes by spending on ALL drugs. Well, this clearly creates a problem when you are looking at this metric this early in the year, simply because many drugmakers have not yet reported their 2021 price increases. So be warned, when you are viewing ALL drugmakers in the dashboard, the yellow line is going to appear artificially depressed until all of the large drugmakers have reported their increases.
However, this chart will work just fine when you are viewing drugmakers that have already reported price increases. Take Pfizer for example, who reported price changes on 1/1/2021. Stat Box #4 shows that Pfizer’s weighted average price increase on drugs with reported 2021 price changes (blue line) was 3.9%, while its weighted average price increase on all of its drugs sold into Medicaid was 3.7% (Figure 6). The proximity of these two numbers tells us that Pfizer’s increases on 1/1/2021 impacted most of its saleable portfolio – at least based on drugs sold into Medicaid. Also note how different this percentage is when compared to Pfizer’s median price increase, which was just 0.5% on the same group of drugs (Figure 6). This reinforces the importance of looking at weighted averages over medians (or straight averages).
Figure 6
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Stat Box #5: Percent of Medicaid Brand Name Drug Spend Impacted by WAC Price Changes
Figure 7
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Important note about Stat Box #5!
If you are viewing this on the publication date – which only includes one day of reported price increases (1/1/2021) – Stat Box #5 will show that 2021 price changes have “touched” drugs representing 39% of Medicaid spending. This is way down from prior years, but it is critical to point out that prior years include ALL price increases across the entire year. The 39% shown above for 2021 only corresponds to the impact of a single day! So if you are using this tool early in the year, please know that 2021 is not comparable to prior years, but rather will grow over the course of the year as more drugmakers report their price increases.
Stat Box #6: Medicaid Cost per Claim of Drugs with WAC Price Changes
Figure 8
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Stat Box #7: WAC Price Changes by Brand Product
Figure 9
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
Quick tip for easier viewing/analysis of Stat Box #7
If you are viewing Week #1 in any year, you will find hundreds of price changes. If you find scrolling through this number of price changes to be too tedious, simply use the following instructions to access the Jedi Archives of data directly (also shown in Figure 10):
Click on the download icon at the bottom right of the entire viz
Select “Crosstab”
Choose “StatBox7”
Select “CSV”
Click “Download”
Bring into excel and have fun!
Figure 10
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshots taken on 1/1/2021
Stat Box #8: WAC Changes on Top Medicaid Brand Name Drugs
Figure 11
Source: 46brooklyn Research, derived from Elsevier Gold Standard Drug Database (GSDD) - Box Score screenshot taken on 1/1/2021
We have spoken
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With this said (technically, written), we will turn this beskar staff over to you to use. It is up to date as of today, which means it includes the first wave of drug price increases for January 2021. We commit to updating this visualization every weekday morning by 10:00am, at least through the month of January. Afterwards, our plan is to update it weekly, at the very least.
You may notice we have explicitly chosen not to comment on this year’s price changes at this time, even though we are among the first ones to have aggregated and analyzed them. That’s because our primary role in the battle against drug pricing opacity is to forge a collection of beskar weapons and armor for the masses to then wield on the battlefield. So for now, we will leave all of this sort of commentary on 2021 brand name drug price increases in your very capable hands.
Your path you must decide
But don’t get us wrong… you know we can’t resist analyzing data, especially when it requires us to dig deep to pull out the story behind the story. On the surface, the story painted by this improved brand box score visualization is one that irrefutably tells us that drug price increases have moderated considerably over the past five years. You don’t need us to tell you that as it jumps off the visualization regardless which angle you view the data.
But then there is Stat Box #6, which shows rapid escalation in the weighted average brand drug costs in Medicaid, at least for drugs experiencing price changes. This piqued our curiosity and catalyzed a deeper dive into what could be driving this.
Biased we may be, but we found the answer to this riddle fascinating, served with a heaping tablespoon of irony. It suggests that the key learning from the months of work we invested to liberate prescription drug WAC price increases for the public is that these price changes are rapidly becoming less meaningful in our quest to pin down the key drivers of drug spending in the U.S. In other words, the “problem” that was drugmaker price increases appears to have been almost solved.
But remember, where you find a master, you will likely find an apprentice – and while the much-maligned price increase problem appears to be on its way out the door, now a new dark side power arises that threatens prescription drug budgets across the galaxy, and that is a squishy concept called “mix.”
The U.S. prescription drug system is predicated on the known tradeoff that in order to entice new, hopefully innovative products to enter the market, we will likely incur higher prices, which are the means to incent development of new medications. In order to bring balance to the Force, patent expirations and generic entries eventually lower the costs of those formerly expensive innovator drugs.
So each year, we add more expensive brand drugs to society’s collective drug mix, and we lose some the least expensive ones as they transition to the generic market, all in all putting natural upward pressure on brand drug prices.
This is an in-the-weeds topic that we chose to wrestle with in the research report released in conjunction with our latest visualization.
Now the choice is yours. You can choose the path of the Mandalorian by clicking on the helmet below. That path will take you to our brand box score visualization where you begin to wage your own war through conducting your own analysis of the U.S. brand price increase universe. Or you can click on Yoda, and continue your training as a Padawan learner in the 46brooklyn school of U.S. brand drug prices as we take a deeper dive in what we learned through our latest visualization.
Whichever path you choose, may the Force be with you
Development (and maintenance) of this visualization and the accompanying analysis was performed by 3 Axis Advisors LLC (“3 Axis”) and supported by Arnold Ventures. The 3 Axis team felt strongly that the information available within the visualization should be freely available in the public domain, and worked with Elsevier to get the end product to a point where it could be shared publicly. As such, the work is able to be donated and provided freely to the public through 46brooklyn Research. 3 Axis Advisors / 46brooklyn Research is grateful to Arnold Ventures for its support, and even more grateful for its shared desire to bring radical transparency to the very opaque U.S. pharmaceutical marketplace.