The beginning of July is when many companies increase the price on prescription medications in the U.S. This year’s price increases are higher than the same period last year.
In many states, when July 1 rolled around, so too did many new laws and taxes, including hikes on gasoline. But what may have slipped by people is the fact that many drug prices also saw significant increases in price.
This morning, The Wall Street Journal reported that 20 companies raised the list price of more than 40 drugs by an average of 13.1%. The price hikes include some generic medications that are administered in hospitals, which happen to be in short supply. The Journal said B. Braun Medical raised the price on more than a dozen drugs, including its antibiotic cefazolin, which saw a 50% increase to $9 per package. Cefazolin, an antibiotic in use for decades, is on the U.S. Food and Drug Administration (FDA)’s list of medications in short supply, the Journal said. Other drugs on that shortage list were also the subject of price increases, the Journal said.
The hikes posted on July 1 this year are greater than those a year ago. Citing Rx Savings Solutions, a software that helps health plans choose the least-expensive medications, the Journal said in 2018, 16 different companies increased the price of medications by an average of 7.8% on July 1.
With July 1 being the halfway point of the year, it’s not uncommon to see a price increase in drugs. Companies typically raise prices at the first of the year and then again on July 1. This year though, the price increases come at a time of increased scrutiny from state and federal lawmakers who have made the cost of medication a political issue. With the scrutiny, numerous companies have pledged to keep drug price increases within “acceptable” levels of 10% or less. As an example, at the beginning of the year, Allergan raised the price on more than two dozen drugs by almost 10 percent. Johnson & Johnson increased the price on about two dozen prescription medications, including its top-selling branded drugs Stelara, Zytiga and Xarelto. In November 2018, pharma giant Pfizer announced plans to raise the price of 41 drugs in January. GlaxoSmithKline increased prices on about three dozen drugs, but by an average of 3%. There were a few outliers at the beginning of the year. Hikma Pharmaceuticals raised the price of morphine by 10 percent and its blood pressure drug enalaprilat by 30 percent.
The Journal report showed that during the first quarter of 2019, list prices for branded drugs in the U.S. saw increases of about 3.3%, as opposed to the 6.3% for the same period the year before.
As has been stated numerous times, the list price is not the same as the retail price a consumer pays at the local pharmacy. There are rebates and discounts that can dramatically affect the price of a medication negotiated between manufacturers, pharmacy benefits managers and insurers. The rebate system has been criticized by the pharma industry for higher costs of drugs. Still, high drug prices, as well as shortages, have caused great concern across the United States. A recent poll showed that a majority of adults, including seniors, who took the survey, are in favor of government actions that could curb the cost of medication. The poll found that 24 percent of adults, as well as 23 percent of those who identified as senior citizens, found the higher out-of-pocket expenses paid for prescription drugs make it more difficult to maintain regular use of their medicines.
