Branded Drug Prices on the Up and Up

Branded drug prices increased in 2010, according to a recent report by Barclays Capital. While most Americans will not be shocked by this information, analysts from Barclays added that the consumer is not directly affected by Big Pharma’s bump in drug prices. Shock and awe ensue!

Branded drug price increases, which are strictly wholesale list prices, mostly affect the middlemen between Big Pharma and the drug counter – leaving consumers to pay normal co-pays and not feel the sting of the higher prices. (One might argue that consumers get hit with these costs elsewhere in the health care schematic through insurance premiums and other costs – but that is fodder for a different blog post.) “For branded manufacturers this [new price point] is a starting point to negotiate with large buyers of the drugs,” says the report's author, Barclays analyst Lawrence Marsh.

According to Barclays, which got its numbers from the kind folks at First DataBank, there were 181 price increases in 2010 at an average increase of 6.9%, compared with 185 price increases in 2009 at an average rate of 6.6%. While the year-to-year comparison is itty bitty, the 2010 numbers are up precipitously from just four years ago when companies increased prices of 158 drugs by an average of 6.2%. This data is based on the top 130 branded drugs by sales.

Marsh says we can expect the upward trend to continue in 2011 and possibly beyond. Why? Mostly because Big Pharma is facing a huge patent cliff and is trying to squeeze every penny from their blockbusters before generic competition floods the market. According to Barclays, prescriptions written for branded drugs were down by 8% to 9% in 2010 – so the drug companies are already feeling the effects of generic drug purchases. Merck made the top 10 list for increases in 2010 with its soon-to-expire antibiotic Avelox (moxifloxacin), bumping up the price 11.9% in September.

According to Marsh, the trend also reflects the shift toward niche markets with few competitors. There is little to stop a company from hiking its drug prices when its unique product is the only drug on the playing field. (Tsk Tsk!)

Drug companies aren’t totally evil – most of the increases don’t trickle down to their bottom lines. The additional funds are partly used to help offset the costs of rebates and prescription assistance programs.

Price increases tend to only happen once a year – usually in January, although companies have been known to hike the price a second time – usually in July. In 2010, Galderma led the pack for price increases with an increase of 20% in June to its acne cream Differin (adapalene) – that’s on top of the 14% increase it enacted in January. Others on the top ten list included AstraZeneca raised prices for Pulmicort Respules (budesonide inhalation suspension) by 10.1% and Seroquel (quetiapine) by 12%, Novo Nordisk raised the price of insulin Novolog Mix 70/30 by 14.5% and Daiichi Sankyo bumped up Benicar (olmesartan) by 11%.

~Lisa LaMotta

image by flickr user richard holden used under a creative commons license