Drug Prices
Aiya Almogaber, PharmD
The research, published May 15, 2025, reveals that the launch prices of oral anticancer therapies covered by Medicare Part D have continued to increase at rates far exceeding inflation over the past decade.
The analysis provides a close look at how manufacturers have consistently set higher initial prices for new cancer drugs over time, despite recent federal efforts such as the Inflation Reduction Act (IRA) of 2022. While the IRA introduced price negotiation authority for older drugs and penalized companies for raising prices faster than inflation, it left out one critical area: the initial price tag when a drug first hits the market.
Tracking price trends over time
The research team identified 86 branded, self-administered targeted anticancer therapies approved between 2010 and 2024. Using Medicare Part D formulary data and the 2025 Plan Finder tool, they calculated the mean per-fill launch price of each therapy, adjusting all figures to 2025 U.S. dollars based on the Consumer Price Index.
Their findings showed that the mean monthly launch price of these drugs rose from $10,954 (for drugs first observed between 2012 and 2014) to $27,891 for those first observed between 2023 and 2025. After adjusting for inflation, launch prices increased by an average of $1,694 per year.
Notably, even after the IRA’s passing, prices continued to climb. Observed drug prices in 2025 were 14.8% to 200.9% higher than what would be expected if prices had risen with inflation alone. While the gap between observed and expected prices narrowed over time, the study still found price growth outpacing inflation in every year analyzed.
Why the IRA hasn’t slowed launch prices
The authors point to several reasons launch prices may have continued to escalate. First, anticancer therapies are part of a protected class under Medicare Part D, which means they must be included on formularies regardless of cost. This undermines insurers’ ability to negotiate for lower prices.
Second, the IRA’s key provisions—rebates for price hikes above inflation and price negotiation—do not apply until a drug has been on the market for at least 9 years. This leaves a wide window for manufacturers to set high initial prices and capture revenue before any price controls take effect.
Finally, the law capped out-of-pocket spending for Medicare beneficiaries at $2,000 annually. While this provision helps protect patients, it may reduce price sensitivity and further encourage manufacturers to raise launch prices without fear of deterring individual consumers.
Implications for Medicare spending
“Companies were already engaging in price maximization for anticancer therapies and continued to do so after the implementation of the IRA,” the authors wrote.
Their findings suggest that, although the IRA may help rein in post-launch price increases, it does little to discourage manufacturers from setting aggressive launch prices from the outset.
The continued rise in launch prices for anticancer drugs places a growing burden on Medicare and its beneficiaries. Even with cost-sharing limits in place, Medicare bears the majority of spending through direct reimbursement. These high upfront prices can result in significant long-term expenditures, especially for therapies that become standard treatments.
The study underscores the need for broader strategies to address launch prices specifically, especially for high-cost therapeutic areas such as oncology.
The authors noted that aligning launch prices with the clinical benefit of a drug may be one path forward. They also emphasized the importance of greater transparency regarding pricing decisions and stronger evaluation of cost-effectiveness at the time of approval.
In the absence of additional policy levers to control launch prices, Medicare may continue to face rising costs for newer anticancer drugs. ■