The Challenge

With new drugs entering the market at record-breaking prices and costly gene and cell therapies in the pipeline, access and affordability are pressing concerns. But the current healthcare system allows for, and even encourages a steady increase in list prices. The vast majority of products are launched at prices well above the incremental value they deliver — and many of those that offer real improvement are priced out of reach of most patients.

Key Problems

Spending on drugs adjusted for inflation has increased 15-fold on a per person basis since the 1980s. Cancer drug prices are up more than 100-fold adjusted for inflation since 1965. In some cases, drugs now cost more than a million dollars. Out-of-pocket costs for drugs and the increase in the rate of drug spending across payers is greater than for any other area of health care. New prescription drugs continue to enter the market at record-breaking launch prices, and prices for some of the early gene and cell therapies suggest the problem may only be getting worse.

The current U.S. healthcare system allows for drug prices that may bear little relationship to improvements in health benefits. Several inter-related issues contribute to high drug prices and a number of interdependent stakeholders share responsibility. As a result of these factors, the pharmaceutical market doesn't behave like typical rational market.