Drug price inflation continues upward momentum at 3.8%

Even as the world's best-selling drug Humira faces copycats this year, the overall drug price inflation rate is expected to hit 3.78%, continuing the recent upward trend, healthcare analytics firm Vizient projects.

While the estimated overall drug price inflation indicates a modest rise relative to recent years, it "does represent a trend towards more significant increases," Vizient said in its Winter 2023 Pharmacy Market Outlook.

The forecast covering the 12 months from July 01, 2023, marks an acceleration from the actual drug price increases at 3.2% and 2.8% for the corresponding periods beginning July 2021 and 2020, respectively.

Vizient, which also functions as a healthcare performance improvement company, uses the pharmaceutical products procured throughout the health system in both acute and non-acute care settings to forecast a year-over-year price change.

"Stakeholders are eagerly anticipating the impact of biosimilar competition entering the market this year, but payer preference will also impact the utilization of biosimilars," Carina Dolan, Vizient's assistant vice president of pharmaco-economics and market insights, said.

"If payers designate the biosimilar and the originator product as co-preferred, we think a faster uptake of a biosimilar product is possible."

However, based on data for the 12 months ending September 2022, Humira has regained its top position in Vizient's member spend, which considers the changes in drug pricing and utilization.

Cancer drugs have accounted for the largest chunk of drug expenditure, making up about 23% of Vizient's member spend, followed by medications for autoimmune and inflammatory conditions, such as Humira and Dupixent.

Dolan predicts that Keytruda is unlikely to cede its top position in the near-term due to rising utilization and high cost.

"Additional indications, as well as use in earlier lines of therapy for cancer treatments, are expected over the next few years," she said about Keytruda, which comes with a list price of more than $10K when administered every three weeks.

Seeking Alpha contributor Edmund Ingham recently downgraded Merck to Hold from Buy, highlighting the impact of the upcoming patent cliff for Keytruda.