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Inflation-adjusted analysis of ICER's Unsupported Price Increase reports: contextualizing drug spending changes
Tyer D Wagner1, Kimberly D Westrich1, Robert J Nordyke2
1National Pharmaceutical Council, Washington, DC, USA.
Journal of Medical Economics
|December 3, 2024
Summary
Inflation adjustments reveal that drug price increases reported by the Institute for Clinical and Economic Review (ICER) may overstate healthcare spending impacts. Accounting for inflation significantly alters the interpretation of unsupported price increases (UPIs).
Area of Science:
- Health Economics
- Pharmaceutical Policy
- Health Services Research
Background:
- The Institute for Clinical and Economic Review (ICER) publishes annual Unsupported Price Increase (UPI) reports, influencing policy and stakeholder decisions.
- ICER's UPI reports analyze net price changes of prescription drugs without adjusting for inflation.
- This methodology may lead to an overestimation of the real economic impact of drug price increases on healthcare spending.
Purpose of the Study:
- To evaluate the economic context of reported drug price increases in ICER's UPI reports.
- To apply inflation adjustments to ICER's estimated impact on healthcare spending.
- To assess how inflation adjustments affect the interpretation of drug price increase data.
Main Methods:
- Applied inflation adjustments using the Medical Consumer Price Index (Medical CPI) and the Consumer Price Index for All Urban Consumers (CPI-U).
- Analyzed data from four recent UPI reports (pricing data from 2018-2019 to 2021-2022).
- Focused on prescription drugs classified as having "unsupported" price increases.
Main Results:
- Inflation-adjusted analyses consistently showed lower estimates of real changes in healthcare spending compared to ICER's unadjusted figures.
- Average differences in spending estimates ranged from 53% (Medical CPI) to 80% (CPI-U) across the analyzed UPI reports.
- In the 2023 report year, an unadjusted $1.3 billion spending increase was adjusted to a $134 million decrease (Medical CPI) or a $1.51 billion decrease (CPI-U).
Conclusions:
- Inflation adjustment significantly alters the findings and interpretation of drug spending changes in UPI reports.
- Unadjusted figures from UPI reports may overstate the actual impact of real price changes in prescription drugs.
- Incorporating inflation adjustments is crucial for evidence-based policy decisions regarding drug pricing and healthcare spending.
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