Think gas prices are high? Have you checked out the costs of new drug treatments recently?

Gas prices have received a lot of attention in the last few months. But have you seen what has been happening with the costs of new drug treatments?

A recent study conducted at Brigham and Women’s Hospital in Boston concluded that the median launch price for new drugs, after rebates to insurers, increased from $1,376 in 2008 to $159,042 in 2021.

Yes, you read that right. It’s not a typo. One hundred fifty-nine thousand and forty-two dollars. Which means that new drug prices have been growing by almost 20% annually for over a decade. And Reuters has reported that for drugs launched in 2022, the median price is $257,000 for a year’s course of treatment. In fact, in 2020 and 2021, almost half of all new drugs were priced at more than $150,000 per year, compared with fewer than 10% in 2008.

These higher prices for drug launches are part of a trend of rapidly rising healthcare costs that has persisted for decades. The Consumer Price Index (CPI) for medical care has risen faster than the CPI for all good and services on a year over year basis for 59 out of the last 65 years. ?If you could have made a bet every January since the late 1950s that the CPI for medical care would increase faster than the overall CPI, you would have made pretty good money, losing out only 6 times.

Higher medical costs are forcing millions of Americans into debt, and often bankruptcy. Even seniors on Medicare are paying $10,000 or more per year on basic cancer treatments .

I can’t think of too many other consequential trends in our economy, that have been so predictably reliable over such a long period of time. Yet we are too often focused on the latest shiny new objects. Anyone want to bet that price of Bitcoin will increase by 20% annually over the next 13 years? Or that cryptocurrency prices will rise in 59 of the next 65 years?

Fortunately, there are more and more government actors at (especially) the state levels , along with a growing number of concerned physicians, who are attempting to tackle this issue. And the recently passed Inflation Reduction Act is a start.

But more needs to be done. It would be great, for example, if the professionals responsible for managing financial assets in the US took a greater interest in this issue. There is clearly room for not only better financial planning around health care costs, but also more affordable insurance products, simpler income protection solutions, and better risk management technologies.

Because the demand for products and services that help mitigate these health-related financial risks are so large, I believe the firms that figure out how to design and sell them will be well-positioned to succeed. Maybe not for 65 years, but likely for a long time.?