Inflation-adjusted analysis of ICER's Unsupported Price Increase reports: contextualizing drug spending changes

The Institute for Clinical and Economic Review (ICER) publishes annual Unsupported Price Increase (UPI) reports on prescription drugs, which have gained attention from policymakers and healthcare stakeholders. These reports do not adjust for inflation in their analyses of net price changes. This study aimed to evaluate the economic context of reported drug price increases in ICER's UPI reports by applying inflation adjustments to the estimated impact on healthcare spending.

Separate inflation adjustments using the Medical Consumer Price Index (Medical CPI) and the Consumer Price Index for All Urban Consumers (CPI-U) were applied to unadjusted UPI findings. The study analyzed data from four most recent UPI reports spanning pricing data from 2018 to 2019 (report year 2020) to 2021 to 2022 (report year 2023), focusing on drugs classified as having "unsupported" price increases.

Inflation-adjusted analyses showed lower estimates of real changes in spending compared to ICER's unadjusted figures across all drugs analyzed. Across the four UPI reports, the average report-year difference in Medical CPI inflation adjustment spending versus unadjusted findings was 53%, whereas the average report-year difference in CPI-U inflation adjustment spending versus unadjusted findings was 80%. In the most recent report year of 2023, ICER's unadjusted estimate of a $1.3 billion increase in healthcare spending transformed to a $134 million decrease when adjusted by Medical CPI and a $1.51 billion decrease when adjusted by CPI-U.

This study demonstrates that inflation adjustment can alter not only the findings but also the interpretation of drug spending changes in UPI reports. The findings highlight the importance of considering economic context in evaluating drug pricing trends and suggest that unadjusted figures may overstate the impact of real price changes. Given the influence of these reports on policy discussions, incorporating inflation adjustments into analyses is one of many steps toward informing evidence-based policy decisions.