Why Does Medicine Cost So Much?

From 2007 to 2016, Mylan raised the list price of its EpiPen about 500%, from just under $100 to more than $600. From 2002 to 2013, insulin prices more than tripled. From 2012 to 2019, the average price of AbbVie’s rheumatoid-arthritis drug Humira climbed from $19,000 a year to $60,000 a year—and that’s after rebates. These are dramatic examples of a systemwide problem: prices for brand-name drugs are rising at a rate that far outstrips inflation.

What’s behind these rapid price hikes? It’s a simple question with a complicated answer that involves three central entities: drug manufacturers, pharmacy benefit managers (PBMs) and insurers. Together, they create a complicated supply chain that helps drive drug prices aggressively upward. “We have a system that is all engine and no brake,” said Michelle Mello, a professor at Stanford Law School and a professor of health research and policy at Stanford Medicine.

Excerpted from Time

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