- A handful of pharmaceutical companies kept with tradition and kicked off the new year with price hikes to some of their flagship products, according to a pair of investment banks.
- Allergan plc will raise prices by 9.5% for at least 18 products, Jefferies LLC analyst David Steinberg wrote in a Tuesday note, including its eye drug Restasis and constipation medication Linzess. Amgen Inc. is instituting a 9.7% increase for its top-selling Enbrel, while the prices on Biogen Inc.'s multiple sclerosis offerings Tecfidera and Avonex/Plegridy are each rising by 8%, according to reports citing a Piper Jaffray & Co. note.
- The list (so far) of drugmakers making price increases also includes Collegium Pharmaceutical Inc., Horizon Pharma plc, Insys Therapeutics Inc., Synergy Pharmaceuticals Inc., Supernus Pharmaceuticals Inc. and Teva Pharmaceutical Industries Ltd.
New year, not-so-new pricing strategies. Biopharmas often enact price hikes twice annually, with early January being one of the more common times to do so.
What is relatively fresh, however, is a commitment from many of the industry's largest players to keep price hikes below 10%. Allergan kicked the trend off in the back half of 2016, and was promptly followed by Novo Nordisk A/S and AbbVie Inc.
Notably, all the latest price increases outlined by Jefferies and Piper Jaffray fell below the 10% threshold, though some just barely. Horizon Pharma, for instance, is hoisting up four products — Actimmune (interferon gamma-1b), Buphenyl (sodium phenylbutyrate), Procysbi (cysteamine bitartrate) and Ravicti (glycerol phenylbutyrate) — by 9.9%.
Drugmakers routinely bump up the cost of their products, but doing so has drawn more scrutiny in recent years due to intense pushback from consumers, payers and lawmakers.
At the same time, biopharmas are seeing less impressive returns from their R&D efforts. Though some have urged for a revised pricing model centered around more outcome-based deals, those conversations are largely in the early stages. With a limited number of solutions in the near-term, many manufacturers are still relying on price hikes in order to offset growing expenses in other parts of their businesses.
To that end, investment bank Cowen & Co. recently disclosed results from a survey of 27 U.S. health maintenance organizations, pharmacy benefit managers and hospitals that together bought more than $66 billion worth of drugs in 2016. The survey responders said the cost per unit prices on brand name medications would likely increase 3-4% annually over the next three years, which was a slower rate than had been previously forecasted.
Cowen's survey also identified market dynamics that would push and pull drug prices. Nearly half of the responders said that a "substantial portion" of the anticipated price increases would come from costly new therapies. Conversely, substitution of biosimilars could impact about 20% of drugs that have a copycat biologic available. Responders noted that "an average of a 33% price discount would be needed to switch from a brand to a biosimilar product ..."
Legal challenges and exclusionary contracting, however, have appeared to slow uptake of biosimilars, diluting the price impact of the emerging field so far.