Drugmakers rang in the new year with an old tradition, reportedly raising the U.S. list prices of hundreds of their products.
Pharmaceutical companies including industry giants Biogen, Bristol-Myers Squibb, Gilead Sciences, GlaxoSmithKline, Pfizer and Sanofi hiked prices on more than 250 drugs, according to an analysis by research firm 3 Axis Advisors.
Price hikes averaged 5.3%, and most increases were less than 10%. Under pressure from Congress and the White House, some drugmakers have pledged to keep price increases in the single digits. “Double-digit increases largely appear to be a thing of the past,” Bloomberg analyst Brian Rye said.
Even so, the average increase was still well above the rate of inflation — and that won’t do much to persuade lawmakers to cease their efforts to reduce to cost of prescription drugs.
“Prices go up but demand remains the same,” said Michael Rea of Rx Savings Solutions, which found in a separate analysis that the 2020 prices increases have averaged 5.8% so far. “Without the appropriate checks and balances in place, this is a runaway train,” Rea told The Wall Street Journal. “Consumers, employers and health plans ultimately pay the very steep price.”
The bottom line: High drug prices are expected to be an important issue in the 2020 election, and President Trump and Congress may take steps to reduce prices before voters head to the polls. “In terms of potential legislation, nothing is imminent, but investors should circle May 22 on their calendars,” Bloomberg’s Rye said. “That’s the health-extender deadline Congress established a couple of weeks ago in the government-spending bill. Policy makers could use drug-pricing and/or surprise billing reforms to offset the cost of long-term extensions for those non-controversial programs.”