Drugmakers Raise Prices Despite Criticisms
Pharmaceutical companies cite high cost of research as reason for price increases
Wall Street Journal | by Peter Loftus
Drugmakers didn’t let up on price increases with the start of a new year, demonstrating the industry’s pricing power in the face of mounting criticisms of prescription costs in the U.S.
Pfizer Inc., Amgen Inc., Allergan PLC, Horizon Pharma PLC and others have raised U.S. prices for dozens of branded drugs since late December, with many of the increases between 9% and 10%, according to equity analysts. The increases are on list prices, before any discounts or rebates that manufacturers sometimes provide insurers and other payers.
Some of the increases add thousands of dollars to the cost of already expensive drugs, and come on top of repeated price hikes in recent years.
Vanda Pharmaceuticals Inc. on Jan 1 raised the price of its new drug Hetlioz, which treats a sleep disorder in blind people, by 10%, to $148,000 a year, a spokeswoman said. Piper Jaffray analysts say the price of the once-daily capsule is now 76% higher than when it was introduced in 2014.
The Vanda spokeswoman said the cost of Hetlioz is “within the price range of treatments that address similar size populations,” noting that fewer than 1,000 patients currently take the drug in the U.S.
Since New Year’s Day, Pfizer has raised list prices an average of 10.6% for more than 60 branded products with annual U.S. sales of at least $10 million, according to Deutsche Bank. Prices for eight of the products went up at least 20%. Pfizer also left prices unchanged for about 10 products.
A Pfizer spokesman said the company offers “considerable discounts” off the list prices, and the company provides medicines for free to patients meeting income criteria.
In recent years, it has been common for drug companies to push through annual price increases in at least the high single digits around Jan. 1 for many brands—and in some cases additional increases throughout the year—analysts said. But this latest round of price hikes is significant in light of the political pressure.
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