The list gets longer: Merck, Allergan, Novartis issue 2020 drug price hikes — report
The price train continues chugging in one direction.
On Friday, a trio of drugmakers — US-based Merck, Ireland-headquartered Allergan and Swiss drugmaker Novartis — issued a round of hikes on more than 100 medicines, vaulting the total number of price raises on 445 drugs in 2020, Reuters reported, citing healthcare research firm 3 Axis Advisors.
These spikes follow those by a cadre of drugmakers including GSK, Pfizer, Gilead, Bristol-Myers, Biogen, Lilly, and Teva earlier in the first week of 2020. In most cases, the sticker price increases have been limited to the mid-single-digit percentages. As the spotlight on drug pricing intensified, with patients, policymakers, and politicians decrying the magnitude and frequency of hikes, a raft of drugmakers — led by Allergan CEO Brent Saunders — previously pledged to not raise their prices by more than 10% annually.
“We don’t have all the data yet,” 3 Axis Advisors’ co-founder Antonio Ciaccia noted in an interview with Endpoints News. Historically, the bulk of the price increases for the year are typically issued by the second week of January.
The biggest offender in terms of price increases is hard to isolate not just because all the price increases not been revelated yet, but because list prices are not reliable indicators of real, average, out-of-pocket costs for insured Americans.
“The amount of increases that we’ve seen so far are pretty well in line with prior years, at least over the last five years. It’s impossible to tell who the bad guy is,” Ciaccia said. “Like if they raised the price by 7%, where that 7% is going — is it going back to…shareholders or is it flowed back to the supply chain in terms of a proprietary discount that’s going to the insurers and the PBMs.”
In the latest round of hikes on Friday, both Novartis and Allergen (which is the process of being swallowed by AbbVie) said the net prices on their price boosted medicines would be either flat or lower in 2020.
Novartis is lifting the prices of 7% of its US medicines — but the drugmaker told Reuters that after discounts and rebates those net prices will decrease by 2.5%. Meanwhile, Allergan is boosting prices on 25 drugs by 5%, and on two more medicines by 2-3%, but following discounts and rebates, its net prices will work out flat-to-lower in 2020, the company claimed to the wire service.
In addition, Merck elevated the sticker price on 15 drugs — including its diabetes drugs Januvia and Janumet — by an average of 5%. The price of the drugmaker’s flagship immunotherapy, Keytruda — which generated nearly $8 billion in the first nine months of 2019 and is on track to become the world’s best selling medicine by 2024 — is going up by 1.5%. Merck’s hikes are “consistent with its commitment to not raise US net prices by more than inflation annually,” the company told Reuters.
“I think over the last three, four years manufacturers have relatively speaking, taken their foot off the gas,” Ciaccia said. “They’re laying low, they’re keeping the increases under 10%. But for the most part, I feel like they’re keeping things within the realm that hopefully keeps them out of the newspapers.”
As of Friday, Ciaccia said there was one small drugmaker that boosted the price of its medicine by more than 10%: Neos Therapeutics lifted the price of its attention deficit disorder drug, Contempla XR, by 13.24%.
Sometimes, drugmakers don’t just take annual hikes — they also take additional mid-year increases, although the practice has gradually wilted as the scrutiny into pricing intensifies.
“Historically speaking, mid-year price heights have really eroded…we’re not seeing the amount of figure price increases that we used to,” Ciaccia said. “It’s hard to have a crystal ball, but if we’re, just judging on past experience, maybe price increases will likely go down again.
Surging drug prices in the United States are a thorny yet key bipartisan issue as another presidential election beckons. While US President Trump struggles to make good on his promise to lower drug prices, the industry, which has long thrived pricing its products without government interference, persistently argues that any kind of interference will stifle innovation.
Lawmakers left and right all argue drug prices in the United States are too high — and the industry holds the crown for the least favored sector by Americans, falling behind the federal government itself — but so far nobody can agree on just how to make the US health care system great again. Last month, the HHS opened the door to a policy that allows for the importation of drugs from Canada.
