Drug Prices Mostly Continue to Climb, Despite Trump's Promises
Associated Press (AP) recently analyzed and published data regarding brand-name prescription drug prices. This was largely in response to President Donald Trump’s promises during the presidential campaign and in a May policy announcement that he would drive down drug prices. In fact, at the end of May, Trump promised pharma companies would be announcing “massive” voluntary drug prices within two weeks.
The AP notes that drug price increases “slowed somewhat and were not quite as steep as in past years.” But overall, there has been no “massive” drug price cuts.
The AP indicates that in the last seven months of the year, that for every price cut, there were 96 price hikes. Alex Azar, Secretary of Department of Health and Human Services, told AP, “I am not counting on the altruism of pharma companies lowering their prices.”
AP also noted that Azar was a senior executive at Eli Lilly and Company when it “dramatically raised prices for its insulin products.”
AP analyzed 26,176 U.S. list prices for brand-name prescription drugs from January 1 through July 31 from 2015 through 2018. It used data from analytics company Elsevier. It focused on the first seven months of each year because price changes are seasonal. The data analyzed include more than 97 percent of price changes over those periods, including varying dosages and forms, including pills, liquids and injectable drugs.
In July of this year, several drug companies announced lowering drug prices. Merck & Co. announced it was lowering some drug prices partly in response to President Trump’s attack on Pfizer. At least two other companies, Roche and Sanofi, decided to get ahead of the curve and announced they would not raise their drug prices in the U.S. this year.
The Pfizer issue occurred in early July. Pfizer announced it would increase the price of 40 prescription drugs. Trump singled out the company while attending a European summit with NATO allies, tweeting, “Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!”
In a statement, Pfizer said it was walking back the decision in order to “give the president an opportunity to work on his blueprint to strengthen the healthcare system and provide more access to patients.” It went on to say that it would hold off on its price hikes until the end of the year or whenever Trump’s pricing blueprint went into effect, whichever came first.
Around the same time, Celgene raised the price of two of its drugs, Revlimid and Pomalyst by 5 percent. And about the week before, Sanofi increased prices for its eczema drug Dupixent by 3 percent. In fact, Bloomberg reported on July 12 that in the first 10 days of July, 10 biopharma companies increased the prices of 20 brand-name drugs. Most of the increases, per data from Rx Savings Solutions and Bloomberg Intelligence, were less than 10 percent, although Aytu BioScience’s Zolpimist was increased more than 700 percent.
Roche, Sanofi and Merck KGaA, all European-based companies, have indicated they have no plans to raise their drug prices this year in the U.S. Roche informed HHS of that decision on July 11. Novartis also agreed to delay price hikes. Merck & Co. (a different company than Germany’s Merck KGaA) indicates it plans to cut prices of some of its drugs. Merck & Co. said it would lower the cost of one drug, hepatitis C drug Zepatier, by 60 percent and others by 10 percent. None are blockbuster drugs or significant revenue drivers. Zepatier brought in $131 million in the first quarter of 2018, down 65 percent from the same period in 2017, and recorded no U.S. sales after rebate payments to insurers.
Although Trump may take credit for any drug price decreases, analysts find it’s only one factor. Kay Morgan, an Elsevier drug pricing expert, told AP, “It’s everyone saying, ‘This has got to stop.’”
AP noted, “She cited frequent media coverage, patients and their advocacy groups pressuring members of Congress to fight high drug prices, and Congress holding hearings on huge price increases. Those include hikes for EpiPen emergency allergy shots and the actions of disgraced former pharma executive Martin Shkreli, who hiked the price of an old infection treatment from $13.50 to $750 per pill overnight.”
“The rate of increases has slowed down, but prices haven’t decreased,” Stephen Schondelmeyer, a University of Minnesota professor of pharmaceutical economics told AP. He also indicates that temporary pricing restraint is common, especially around elections or when publicity on the topic is prevalent.
Another drug analyst, Ashtyn Evans with Edward Jones, told AP that “companies are self-policing more,” but they also are taking a single annual price hike closer to 10 percent instead of two or three smaller hikes each year. She also said, “That started before Trump was even elected.”
The U.S. population, not surprisingly, is highly critical of drug prices. A West Health Institute poll in mid-August of 1,002 adults, found that 77 percent found prescription drug costs “unreasonable.” At the same time, less than 25 percent approved of Trump’s approach to the problem.
One reason the public has issues with drug pricing is when a story breaks about drug pricing, the increase is so dramatic. Shkreli's example is one, of course, but not the only one. Mylan NV’s EpiPen is another example, where a $1 lifesaving product can hit prices of up to $500. In a more recent example, in August, Nostrum Pharmaceuticals, based in Kansas City, Missouri, increased its price of a 65-year-old generic version of a liquid antibiotic used to treat bladder infections by 404 percent to $2,392.32 per bottle. The company’s chief executive officer, Nirmal Mulye, told AP that Casper Pharma, which offers the brand-name version of nitrofurantoin, had increased its price to $2,800, so Nostrum decided to maximize its own profit after years of losing money.
The Trump administration’s blueprint for drug pricing is 44 pages long and titled, “American Patients First.” Many analysts believe it does a good job in increasing competition in order to drop drug prices but does little if anything to address rebates and wholesaler discounts, which are a large factor in drug prices.
It’s also early in this process. Time will tell.