This Pharma Giant Just Revealed 7 Years of Its U.S. Drug Price Increase History

January 30, 2017
By Alex Keown, BioSpace.com Breaking News Staff

NEW YORK – As drug pricing continues to be a concern for the public and the new presidential administration, Merck pulled back the curtain on its pricing practices in the United States.

The company published a “Pricing Action Transparency Report” for 2016. Its data, according to the company, shows the average annual net price increases have remained in the “low to mid-single digits since 2010.” Merck added that the pricing takes into account rebates, discounts and returns. According to the chart, the highest net price change was 6.2 percent in 2012. That year the company listed price change of 9.2 percent, but the net price was dropped after factoring in a discount of 29.9 percent. Last year the company increased drug prices by an average of 9.6 percent, but when the discounts were factored in, the net price change was 5.5 percent, Merck said.

“In 2016, our gross U.S. sales were reduced by 40.9 percent as a result of rebates, discounts and returns,” Merck said in its statement.

Merck, among other companies, has faced criticism over the price of some of its medicines, particularly those companies that dramatically increased prices, such as Turing Pharmaceuticals’ 5,000 percent increase for Daraprim and Mylan ’s 400 percent increase for the price of the EpiPen Auto Injector. Earlier this year, Wells Fargo analyst David Maris told BioPharma Dive that 2016 prices for 19 drugs “increased by more than 1,000 percent, while 43 drugs crossed the 500 percent threshold and 100 drugs had prices doubled. Prices on almost 2,000 drugs were increased by between 9 percent and 40 percent.”

Adam Schechter, president of Merck’s Global Human Health, said in an accompanying blog post to the transparency report that the company understands the public anger over price increases.

“Merck has increased prices, and in our view, we have been responsible in our approach. But we want to allow the public to judge for themselves by providing information for people to better understand our pricing practices–including the rebates and discounts that we provide to payers (insurers, pharmacy benefit managers, the government),” Schechter said.

In pointing out the discounts the company has provided over the past six years, Schechter said that Merck has also spent more than $50 billion on research and development of drugs during the same time period. He added that Merck is exploring “alternative pricing and contracting arrangements by entering into value based contracts with payers.”

“We don’t expect this new information to change the conversation from price to innovation. But we hope it will help. We know that we can do more to reach more patients with the medicines we have today. We’re focused on that–and on ensuring that Merck can continue to invest in R&D to fight the diseases we all worry about–such as Alzheimer’s, cancer, and infectious diseases. Great progress has been made, but more needs to be done, and we want to be a part of the solution,” Schechter said.

Pricing has been a concern for some time. Before being sworn in as president, Donald Trump held a press conference and condemned pharma companies for pricing practices. He also said the drug companies are “getting away with murder” when it comes to the prices the companies charge for medication. Trump said he plans to change the way the government bids on drugs in order to bring prices down–something he’s said in the past could save up to $300 billion, annually.

Earlier this month, Allergan announced price increases for some of its older drugs. Last year, Allergan ’s Chief Executive Officer Brent Saunders publicly vowed to keep price increases on the company’s drugs under 10 percent in 2017. Allergan stuck to its word, keeping the price increases between 9 and 9.5 percent. Other companies that started the new year with price increases on some drugs include Teva Pharmaceuticals , which set prices of some of its drugs between 6 and 9 percent higher, and Horizon Pharma , which increased some of its drugs by 9.9 percent.