January 6, 2020

Several drugmakers this year already have announced they are increasing the list prices for nearly 450 drugs sold in the United States, according to pharmaceutical companies and analyses of drug pricing data.

5 ways to control the flow of prescription drug expenditures

This news comes after federal lawmakers last year appeared on track to pass legislation to address rising prescription drug costs in the United States. Congress ultimately delayed legislative action on the issue to this year. Separately, the Trump administration late last year issued a notice of proposed rulemaking and draft guidance that together would allow states and drugmakers to import lower-cost versions of drugs from other countries—though the proposals exclude certain high-cost and specialty drugs, such as biologics and insulin, that have been major concerns in discussions about drug pricing.

Drugmakers raise prices for 2020

At least 12 drugmakers—including AbbVie, AllerganBiogen, Bristol Myers Squibb (BMS), GlaxoSmithKline (GSK), Gilead Sciences, Merck, NovartisPfizer, Sanofi, Roche's Genentech, and Teva Pharmaceutical Industries—implemented list price increases for some of their products so far this month, according to pharmaceutical companies and analyses by 3 Axis Advisors, GoodRx, and Rx Savings Solutions.

3 Axis Advisors counsels pharmacy industry groups on inefficiencies in the drug supply chain, GoodRx provides a platform for uses to compare prescription drug prices, and Rx Savings sells software to help employers and health plans choose the lowest-cost drugs. The analyses are based on drugs' list prices, which do not include any rebates or discounts provided by drugmakers or any insurer payments for the drugs, the Wall Street Journal reports. As such, the prices do not necessarily reflect the costs patients would have to pay out-of-pocket for the drugs.

For example, Rx Savings Solutions found AbbVie increased the list price of its rheumatoid arthritis treatment Humira by 7.4%, while 3 Axis Advisors found AbbVie increased the price of its newly-launched psoriasis treatment Skyrizi by more than 7%. AbbVie could not be immediately reached for comment, Reuters reports.

In addition, 3 Axis Advisors found Biogen increased the list price of its multiple sclerosis treatment Tecfidera by 6%. None of Biogen's price increases exceeded 6%, the Journal reports. A Biogen spokesperson confirmed the price increases and said they apply to products for which the company continues to invest in research, and otherwise are in line with inflation.

Meanwhile, BMS increased week increased its list prices for 10 drugs, including a 6% increase for its blood thinner Eliquis, a 6% increase for its multiple myeloma drug Revlimid, and 1.5% increases for its cancer immunotherapies Opdivo and Yervoy. BMS said the company will not raise the list prices for its drugs by more than 6% in 2020.

Merck raised its list prices for about 15 drugs, including its diabetes treatments Januvia and Janumet, mostly by about 5%, according to 3 Axis. Merck raised the list price of its cancer immunotherapy Keytruda by 1.5%, Reuters reports. Merck said the increases are in line with the company's commitment to not raise net prices in the United States by a rate that outpaces inflation.

Allegan raised its list prices for 25 drugs by about 5%, and increased its list prices for two additional drugs by between 2% and 3%, the company said. However, the company said it would provide higher rebates and discounts that ultimately will keep net pricing flat or lower this year, Reuters reports.

Novartis increased its list prices for nearly 30 drugs, including its psoriasis treatment Cosentyx and its multiple sclerosis treatment Gilenya. According to Reuters, most of the increases ranged from 5.5% to 7%. Novartis said it was raising list prices for about 7% of the drugs it sells in the United States, but noted that the company expects a net price decrease of 2.5% in 2020 after accounting for discounts and rebates the company provides to commercial and government payers.

GSK increased its list prices for more than 30 drugs, including its Ellipta inhaler; cancer drug Zejula; shingles vaccine Shingrix; and HIV-focused therapies sold under ViiV Healthcare, which is a joint venture between GSK and Pfizer. GSK's price increases range between 1% and 5%, Reuters reports. A GSK spokesperson confirmed the price increases and noted that net prices for the company's U.S. products have decreased by about 3.4% on average annually over the past five years.

Meanwhile, Pfizer increased its list prices for more than 90 drugs, according to Rx Savings Solutions. Pfizer increased the list prices of more than 40 products by more than 9%, the Journal reports. For example, Pfizer increased by 15% the price of its heparin products, which are generic blood thinners usually administered in hospitals. Pfizer also increased the list prices of its cancer treatment Ibrance, its Prevnar vaccine for pneumococcal disease, and its rheumatoid arthritis treatment Xeljanz, among other products.

Pfizer said it raised the prices of its heparin products to help offset a 50% increase in the cost of raw materials and to expand its capacity to meet market demand. Overall, Pfizer spokesperson Amy Rose said the company plans to increase the list prices on about 27% of its portfolio in the United States by an average of 5.6%. Rose said 43% of the drugs seeing price increases are sterile injectables, and many of the prices are increasing by less than $1 per product. Pfizer also noted that the price increases will offset higher rebates the drugmaker will pay to insurers and pharmacy benefit managers (PBMs). According to STAT+'s "Pharmalot," Pfizer also decreased the list prices of 37 hospital treatments by 90% or more and did not change the list prices of 73% of its drugs.

Gilead and Teva each raised their list prices for more than 15 drugs. Gilead's price increases include a less than 5% increase for the HIV treatments Biktarvy and Truvada.

According to the Journal, none of Teva's price increases will be more than 6.4%. A Teva spokesperson said the company regularly reviews the company's drug prices and take availability, the cost of production, and market conditions into context during those reviews. A spokesperson noted that Teva sets its list prices with the goals of helping patients access treatments, maintaining a commitment to innovation, and fulfilling obligations to its stakeholders.

Sanofi increased the list prices of about 10 of its drugs. Sanofi's price hikes will range between 1% and 5%. Sanofi said the company's price increases are in line with its commitment to not increase drug prices by a rate that surpasses medical inflation.

Genentech increased the prices of 11 of its drugs by between 1% and 3%. Other drugmakers are expected to announce price increases this week, and more could come as the year progresses, Reuters reports.

Price hikes are down from last year

Overall, the analyses found drugmakers increased the list prices of the affected products by an average of more than 5%, but less than 6%. For instance, Rx Savings Solutions found the list prices of hundreds of drugs increased by an average of 5.8%, while GoodRx found drugmakers increased list prices by an average of 5.1%. Eric Pachman, a co-founder of 3 Axis Advisors, said almost all of the price increases that were announced Jan. 1 are less than 10%, and half of the increases range from 4% to 6%. The median price increase is about 5%, Pachman said.

In comparison, more than 50 drugmakers raised drugs' list prices by an average of more than 6% last year, according to Rx Savings Solutions. Further, the number of products affected by list price increases during the first two days of this year is "below the average of 371 drug price increases [that occurred during] the first two days over the past five years," Reuters reports.

Still, Antonio Ciaccia, a co-founder of 3 Axis Advisors, said the list price increases announced so far this year are "at least in the ballpark of prior years." Ciaccia said, "At first glance, it looks like [drugmakers are] taking their foot off the gas a bit," but "[t]he number of increases is on pace to be comparable with last year, if not a little bit less." However, he noted, "[N]ot all of the companies have reported yet. So it's still too early to say too much about the data."

Ciaccia suggested that discounts and rebates provided by drugmakers could be driving some of the list price increases. "Some of these drugs that are seeing the bigger increases are in competitive classes, and while we can't see what's happening behind the scenes, it's not unreasonable to assume that a good portion, if not all, of the increases could be attributed to price concessions made by drugmakers to entice formulary coverage from insurers, PBMs, and government payers," he said.

Some experts noted that the single-digit price increases could reflect drugmakers' desire to avoid policymakers' scrutiny.

Ian Spatz, a senior adviser at the consulting firm Manatt Health, said, "I'm sure many manufacturers are interested in making sure they are not called out on a large list price increase."

However, Christopher Raymond, a PiperJaffray analyst, said he believes "the broader point here is that—despite all the attention and threats—in terms of legislative action, executive action, and other policy moves—drug pricing mechanisms and economics that have attracted so much negative attention in recent years remain very much intact." Raymond said the increases are "somewhat remarkable, given how much scrutiny has been assigned to pharmaceutical drug pricing—both in terms of tactics and industry structure—over the last several years."

Ben Wakana, executive director of Patients For Affordable Drugs, said the list price increases demonstrate the need for action in Congress. "Widespread price hikes to start the new year show why we can't rely on drug corporations to exercise self-restraint; we need to enact laws to stop them," he said.

Michael Rea, CEO of Rx Savings Solutions, said list prices are increasing, but "demand [for the products] remains the same." He continued, "Without the appropriate checks and balances in place, this is a runaway train. Consumers, employers, and health plans ultimately pay the very steep price."

An HHS spokesperson said, "The Trump administration remains steadfastly focused on lowering drug prices" (Hopkins, Wall Street Journal, 1/2; Erman/O'Donnell, Reuters, 12/31/19; CNBC/Reuters, 1/1; Martin, Newsweek, 12/31/19; Silverman, "Pharmalot," STAT+, 1/2 [subscription required]; Sullivan, The Hill, 1/2; Erman, Reuters, 1/2; Erman, Reuters, 1/3).

Five ways to control the flow of drug expenditures

Prescription drug expenditures are the fastest growing component of health care spending. And while reducing unwarranted prescribing variation is the single biggest improvement opportunity, there are several other near-term chances to reduce spending and grow revenues.

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