Pharmaceutical firms raised their drug prices by an average of 6.6% during the first few weeks of January. An estimated 150 drugmakers raised prices on 866 items in the United States through January 20. This includes cancer, diabetes, and other prescription medicines.
Drug Prices Rose by 6.6% On Average In January Alone
Manufacturers passed on moderate increases in their drug prices during the first month of 2022. This is according to Rx Savings Solutions, a software vendor that specializes in helping healthcare companies source competitively-priced drugs.
The increase in drug prices nearly matches the US inflation rate recorded for 2021, which is 7%. Traditionally, drugmakers raise the prices of their products during the first few weeks of the new year.
Over the years, pharma companies piled up double-digit price increases on their medicines. In particular, many firms raised flagship drug prices by more than 10% in 2015 and 2016.
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Ronny Gal, a pharmaceutical industry analyst at Bernstein & Co, said those times are long gone. “Those were the years the companies went hog wild on price increases.
That was the peak,” he added. Soon after, many companies began slowing down after receiving political pushback. The industry is also anxious to avoid the imposition by Congress of regulations to control who sets the prices. In fact, the spate of increases prompted criticism from both Republicans and Democrats.
Pharma Says It Won’t Feel The Increase in Drug Prices in 2022 in Their Bottom Lines
Many drugmakers say that they are the last to benefit from price hikes. Many manufacturers provide large discounts to health insurers and pharmacy-benefit managers. The latter is a company’s point person in assessing drug benefits for employers.
Aside from political pressure, manufacturers hesitated on their increases due to new drug-pricing measures designed to reduce inflation, Gal added.
Many pharmacy-benefit managers negotiated caps on price increases. This required drug makers to pay rebates on product sales with increases above certain thresholds. In addition, Medicaid gained a larger share of the medical insurance market.
As a result, the Biden administration also plans to cap manufacturers’ ability to set price hikes. As part of Biden’s Build-Back-Better spending program, the medical provisions on prices also remain inanimate in Congress.
This includes several drug-pricing provisions that reduce big pharma’s pricing power. Specifically, it will place a cap on price hikes against overall inflation rates. As a result, the government will intervene and negotiate drug prices themselves.
Last Year, Drug Companies Raised Prices By 4.5%
The average 6.6% increase this January does not cover rates for different doses for the same drug. This is according to the Rx Savings Solutions analysis.
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In addition, drugmakers only raised prices by an average of 4.5% on 893 drugs.
This year’s drug price increases included several of the biggest-selling medicines in the United States. They include drugs that cost several tens of thousands of dollars a year.
For example. Eli Lilly & Co. hiked their diabetes medicine Trulicity by 5%. AbbVie’s anti-inflammatory Humira went up by 7%. Meanwhile, Bristol-Myers Squibb Co. raised the price for their blood-thinner Eliquis by 6%.
Watch the Yahoo Finance video featuring billionaire investor Mark Cuban tackling high drug prices:
What do you think of rising drug prices for many local medicines? Will Americans soon be unable to afford the medicines they need? Why do you think so?
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