The U.S. pharmaceutical industry just unveiled a new round of hefty price hikes, shrugging off mounting concern among consumers, presidential candidates and public policy experts about the sharp spike in prescription drug costs.
Pfizer Inc., Amgen Inc., Allergan PLC and other companies have raised U.S. prices for scores of branded drugs since late December, with many of the increases between 9 percent and 10 percent, according to Wall Street Journal interviews with equity analysts.
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Although the increases are on list prices that may be reduced by discounts or rebates from manufacturers, the increases nonetheless are running far ahead of inflation and are putting pressure on many consumers, health insurers and government agencies that purchase large quantities of prescription drugs.
Democratic presidential candidates Hillary Rodham Clinton and Sen. Bernie Sanders of Vermont are vying with each to show who would be tougher in reining in prescription drug prices and fostering increase industry competition, while some Republicans including frontrunner Donald Trump have criticized drug companies for gouging consumers.
“A 10 percent increase every year is the definition of an unsustainable trend,” John Rother, president and CEO of the National Coalition on Health Care, said on Monday. “It’s the fastest rising part of the health care market basket and it’s putting unsustainable pressure on health care finance generally. From a political standpoint, it’s pretty presumptuous to raise prices that aggressively in the face of criticism across the board….” he added. “It’s almost like they’re daring Congress to act.”
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Pfizer alone hiked U.S. prices for over 100 drugs on January 1, some by as much as 20 percent, according to statistics compiled by global information services company Wolters Kluwer. Pfizer confirmed a 9.4 percent increase for the pain drug Lyrica, which generated $2.3 billion in U.S. sales in 2014; a 12.9 percent increase for erectile dysfunction drug Viagra, which had 2014 sales of $1.1 billion; and a 5 percent increase for Ibrance, a breast cancer drug launched last year at a list price of $9,850 per month, or $118,200 per year, according to a report by Reuters.
Pfizer also announced plans last November for a $160 billion merger with Ireland-based Allergan Plc in order to substantially slash its U.S. tax bill. The merger would be the largest corporate “inversion” ever, saving the company billions of dollars.
Among other notable prescription drug price hikes, according to published reports:
Vanda Pharmaceuticals raised the price of a new drug for treating a sleep disorder in blind people called Hetlioz by 10 percent, to $148,000 a year.
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Amgen increased the anti-inflammatory drug Enbrel by 8 percent in late December, on the heels of an 8 percent increase in September and a 10 percent hike last May. Enbrel costs about $704 a week for a typical dose for treating rheumatoid arthritis.
Horizon Pharma increased prices for five of its drugs by 9 percent to 9.9 percent, including ActImmune, a treatment for hereditary diseases, while Eli Lily boosted the price of Trulicity, a drug for Type 2 diabetes, by 8 percent.
Pfizer and other major drug companies defend their drug pricing practices – arguing that substantial funds must be invested in research and promoting new drugs. They also note that manufacturers frequently provide generous discounts or rebates to consumers or government agencies that purchase drugs in large quantities such as Medicaid, Medicare and the Department of Veterans Affairs.
However, critics say that prescription drug prices are running rampant, especially the relatively new biologic drugs such as Sovaldi and Harvoni, which can cost as much as $1,000 a pill retail to treat the potentially deadly virus hepatitis C. At the same time, many other lesser biologic drugs gaining in popularity have shot up dramatically in price in recent years.
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The average retail cost of a year’s worth of just one of those drugs was $53,384 – or more than the median U.S. household income. In 2014, U.S. prescription drug spending rose by 12.2 percent, surging from a growth rate of just 2.4 percent in 2013, according to Department of Health and Human Services figures.
Last month, the leaders of a Senate committee condemned four companies for aggressively increasing prices for prescription drugs and for exploiting a system lacking in competition. An investigation by the Senate Special Committee on Aging focused on Turing Pharmaceuticals, Valeant Pharmaceuticals, Retrophin Inc. and Rodelis Therapeutics.
Turing and its former CEO, Martin Shkreli, first prompted public outrage last fall following reports that the company had increased by more than 5,000 percent the price of Daraprim (non-biologic), a 62-year-old drug used to treat a life-threatening infection, boosting it from $13.50 to $750 per pill.
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Valeant, a Canadian company, has come under investigation by several members of Congress for its drug pricing strategy. Two drugs sold by Valeant to treat cancer-related skin conditions increased in price by about 1,700 percent over the last six years. Turing and Valeant have received subpoenas from U.S. federal prosecutors seeking information about drug pricing and other policies.
It should be noted that Valeant was one of the few companies that has not raised its prices since September, according to The Wall Street Journal. A spokesperson told the newspaper that changes in the company’s product lineup have made pricing a smaller part of its expected sales growth.
“Under intense public scrutiny, yes, Valeant didn’t raise its prices,” Rother said. “But you have the feeling they’re just delaying until things calm down.”