- Since President Donald Trump called out Pfizer and other drugmakers for prescription drug price increases in July, the issue has largely stalled.
- Now, though, pharmaceutical companies are implementing new drug price hikes. One expert predicted that the increases could even be larger than usual.
- Expect to hear a lot more about the cost of drugs this year.
Drug companies raise their prices each January, as predictably as people make New Year’s resolutions.
This January is no exception – the only question is if that will provoke any meaningful policy changes.
Drugmakers have put price hikes on a low simmer since July, when President Donald Trump publicly shamed “Pfizer & others” by tweet for jacking up their prices. Pfizer agreed to postpone its increases, and other companies either didn’t take price increases, or at least reduced their price-hike ambitions over the last year, according to Bernstein analyst Ronny Gal.
But since the calendar turned to 2019, all that has been left behind.
More than 1,000 prices on roughly 285 individual medications have been increased so far in 2019, with most percentage increases coming in below 10%, according to Rx Savings Solutions, a software company that works with employers and health plans so that patients can comparison shop.
“I think the calls for decreases or no increases by the president, the public and payers are largely disregarded,” Rx Savings Solutions CEO Michael Rea told Business Insider. “If they’re hitting their numbers, they’re going to continue using the practice that allows them to do that.”
Noting “the sheer amount of investor interest in new year price increases,” EvercoreISI analyst Umer Raffat highlighted some of the most important price increases made by biopharmaceutical companies on Jan. 1 in a report that day.
Allergan increased prices on seven key drugs by 9.5% – just under the company’s self-imposed limit – while Bristol-Myers Squibb hiked the price of leading cancer drugs Opdivo and Yervoy (1.5%), the chemotherapy treatment Sprycel (6%), the anticoagulant Eliquis (6%) and the autoimmune disease drug Orencia (6%), according to Raffat.
Biogen, meanwhile, increased prices on its multiple sclerosis medications Tecfidera (6%), Plegridy (2%) and Tysabri (3.5%), Raffat said, and Eli Lilly & Co. increased prices of two important drugs, including the type 2 diabetes medication Jardiance, by 6%.
This year, there could even be “a step up in both the number and magnitude of list price increases (as opposed to a more gradual returning to business as usual),” Bernstein’s Gal predicted. “However, while individual companies may do well, the price increases taken together would suggest Pharma is ‘tone deaf’ to public concerns.”
Gal noted that drugmakers are once again boosting their prices just as Congress is setting its agenda. The high cost of prescriptions has drawn the ire of both Democrats, who will control the House of Representatives, and Republicans, who are expanding their majority in the Senate.
Other are expecting smaller-than-usual price increases, given all the attention on the subject.
After Trump’s tweet, “that freeze is starting to thaw,” Pratap Khedkar, managing principal of consulting firm ZS Associates, told Business Insider, “but it’s muted.”
“Drug companies are facing greater scrutiny than ever on list price increases, and we expect list price increases to moderate somewhat,” compared with those made in 2018, Morgan Stanley analyst David Risinger agreed.
No matter what, expect to hear a lot more about the high cost of drugs this year.
“We believe that the noise over drug pricing in 2019 – 2020 will be unrelenting,” Veda Partners analyst Spencer Perlman wrote.
“There likely will be news every single day due to a multitude of high-profile congressional hearings, legislation introduced, presidential shaming, and regulations proposed as both parties try to one-up the other in demonizing pharma and threatening heavy-handed government actions to drive down pharmaceutical prices.”