Some Drugmakers Are Canceling Price Hikes – but Not Because of Trump
Health Care

Some Drugmakers Are Canceling Price Hikes – but Not Because of Trump

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Pfizer may have decided to roll back drug price hikes after being criticized by President Trump, but Bloomberg reports that several other large drugmakers are canceling or reducing planned price increases, perhaps in part because of a new California drug pricing transparency law that requires them to provide at least 60 days’ notice of price increases greater than 16 percent during a two-year period.

“In the past three weeks, Novartis AG, Gilead Sciences Inc., Roche Holding AG and Novo Nordisk A/S sent notices to California health plans rescinding or reducing previously announced price hikes on at least 10 drugs,” Bloomberg’s Ben Elgin, Cynthia Koons and Robert Langreth write.

The law is being challenged in court by the industry, but manufacturers have been complying while the case plays out.

Still, one industry analyst tells Bloomberg that the California law won’t actually slow the rate of price hikes. “If what you are trying to do is limit price inflation, this is not the way to go about it,” said Richard Evans, an analyst at investment research firm SSR. “This is not going to change mainstream list price behavior at all.”

Evans says that the drugmakers involved are probably just “throwing up a smokescreen” to hide the details of their price increases from competitors and patients.

Why it matters: These early results from California’s law might look encouraging, but it’s still a far cry from structural reforms that will keep prices in check.