- Big pharmaceutical companies raised list prices an average of 5% in their annual January adjustments, the smallest increase since at least 2014, according to analysts from the investment bank Raymond James. The analysis comes ahead of President Donald Trump's State of the Union address, where he is expected to announce a new drug-price control initiative.
- The bank's analysis, based on data from IQVIA and Wolters Kluwers, found big pharma is raising prices of more drugs than they were in the era of double-digit price hikes, with 2,227 having gone up in January.
- The U.S. government's measures show drug prices overall have been flat or even in decline. While the bank's analysis doesn't back up that finding, it does confirm a picture of moderating price inflation, likely due to payer and public pressure.
Raymond James analyst Elliot Wilbur's note covers wholesale acquisition cost, or WAC, increases, the list prices set by drugmakers. It is not the price actually paid by most customers, which are big insurers that negotiate discounts and rebates to establish a "net price."
However, it is a useful indicator of the expected level of net price increases. While drugmakers increase prices throughout the year, a declining number are being announced after January, making the early-year hikes the key barometer.
Since 2014, January price increases from 25 big companies have declined steadily from 12% to 5.2% in 2019. The declining trend has coincided with a rising concern about drug prices first triggered by the launch of hepatitis C cures at $1,000 per pill. It has been carried on by expensive life-extending cancer cell therapies and gene therapies whose price tags exceed $1 million.
"Given the transparency the public and the government is continually seeking from the industry, combined with administration initiatives to slow the rate of list price increase levels, WAC list price increases should continue to trend toward the low to mid-single digits with longer-term potential to reach levels consistent with changes in overall inflation metrics," Wilbur wrote.
Big pharma January price increases by year.
|Mean price increase
|Total number of price increases
SOURCE: Raymond James, IQVIA, Wolters Kluwers
In January, the company with the biggest average price increase was, surprisingly, generics giant Teva Pharmaceuticals, at 6.4% over 36 products. The smallest was AstraZeneca at 2.8% over 31 drugs.
Pfizer raised prices on the most drugs, 226, yielding a mean increase of 5.1%. Subsidiary Hospira was counted as a separate line item in this analysis — it raised prices on 26 products. Spanish blood-products specialist Grifols raised on the least, with a 3.4% increase.
The Trump administration has promised to bring drug price inflation down even more, although it has struggled to implement initiatives like banning drug price rebates in Medicare and Medicaid and forcing pharmaceutical manufacturers to show list prices in direct-to-consumer advertisements.
In Tuesday night's State of the Union address, Trump is expected to announce a regulation to bring physician-administered injectable drugs more in line with international prices through a Medicare competitive bidding program.