Updated: 12:28 PM CST
Jan 4, 2019
By Tami Luhby
President Donald Trump
and Democratic lawmakers alike are pressuring drugmakers to lower prices, but
they don't seem to be listening.
Sixty pharmaceutical
companies kicked off 2019 by raising list prices on nearly 300 drugs, according
to an analysis by Rx Savings Solutions. And more drug manufacturers are
expected to quietly follow suit in the coming weeks — a delay experts say appears calculated to avoid attracting undue
attention from Washington.
"Companies are
becoming more savvy about having the administration feel like they have a
win," said Stacie Dusetzina, a health policy researcher at Vanderbilt
University.
Trump, who has made controlling drug price increases a priority,
continues to insist he can get drugmakers to lower prices. He noted at
Wednesday's Cabinet meeting that the Department of Health & Human Services
is "almost ready to make that big final push" to address the issue.
"We've done an
incredible job," the president said. "I think you're gonna see a
tremendous reduction in drug prices."
Administration
officials rolled out a 44-page blueprint last
May that laid out the president's vision for increasing competition, reducing
regulations and changing incentives for players in the industry.
Much of what the
Department of Health & Human Services has done so far consists of putting
forward proposals, largely involving what Medicare will pay for medications.
One of the more
significant plans would set the reimbursement level for certain drugs
administered in doctors' offices and hospital outpatient centers based on their
cost in other countries, which typically pay far less. The so-called
International Pricing Index model has already faced blow-back from many
quarters, including Republican lawmakers.
But so far, most of
the efforts have been on the margins.
"The rhetoric
they are using is out of scale with their proposals," said Rachel Sachs,
an associate law professor at Washington University who studies drug pricing.
Congressional
Democrats plan to hold hearings on high prices and have pledged to pass
legislation seeking to make medications more affordable.
Democratic contenders
for the 2020 presidential nomination are also trying to make their mark in the
health care arena.
U.S. Sen. Elizabeth
Warren, D-Massachusetts, last month proposed having the federal government
manufacture certain generic drugs and sell them at a more affordable price.
"The solution
here is not to replace markets, but to fix them," said Warren, who
announced her presidential campaign exploratory committee earlier this week.
"The Affordable Drug Manufacturing Act will introduce more competition
into the prescription drug market and bring down prices for consumers."
Few consumers actually
pay the full list price of drugs, though many do feel the increases because their
payments at the pharmacy are tied to the medications' list cost. This is
particularly true of those who have high-deductible health insurance plans or
pay a share of the price rather than a flat co-payment, as well as some on
Medicare.
The heightened focus
on prices is leading some companies to alter when increases are announced.
About one-third fewer drugmakers announced hikes on Jan. 1 than a year earlier,
and industry observers say that's likely because they want to scatter them out
over time to avoid attention.
Pfizer, for instance,
is not on Rx Savings Solutions' list. That's because officials with the company
announced in November that it would raise prices on 41 drugs, but not until
Jan. 15. The manufacturer temporarily walked back hikes last summer after Trump tweeted it
should be "ashamed" for raising prices and taking advantage of the
poor.
Last year, there were
approximately 2,100 price increases with a median increase of 9 percent
compared to just under 1,400 hikes with a typical jump of 9.1 percent a year
earlier, according to David Maris, a Wells Fargo securities analyst, citing
pricing data from Wolters Kluwer, an information company.
Companies do appear to
be tempering their hikes in 2019, according to Michael Rea, CEO of Rx Savings
Solutions, which sells software to employers and insurers to reduce drug costs.
The average increase was 6.3 percent, down from nearly 9 percent a year ago,
taking into account different dosages of the same drug. Many of the hikes were
close to 10 percent, though others were smaller.
Allergan raised prices
on 51 drugs on Jan. 1, just over half of its portfolio. Some 27 medications saw
a 9.5 percent jump and the rest a 4.9 percent increase. Officials with the
company, however, said it does not expect to see any net gains, since it is also
providing higher rebates and discounts to insurers, pharmacy benefit managers
and the government.
"Allergan further
expects that the rebates and discounts will be passed on to patients to reduce
their out of pocket expenses for these medicines," said an official for
the drugmaker, which promised in 2016 to raise prices only once a year and
limit the increase to less than 10 percent.
Teva Pharmaceuticals
upped the price of more than a dozen products, many by more than 9 percent.
Officials with the company did not return a request for comment.
The drug industry's
trade group called the Rx Savings Solutions analysis "flawed and
inaccurate," saying it did not take into account that 40 percent of the
medicines' list prices are given as rebates or discounts. PhRMA cast blame on
insurers, pharmacy benefit managers and others for not passing along those
savings.
"We need to
change the incentives in the supply chain that fuel higher rebates and prices
and do more to ensure rebates are used to lower costs for patients at the
pharmacy counter," a PhRMA official said in a statement Wednesday.
Meanwhile, drugmakers
are continuing to consolidate. Bristol-Myers Squibb announced Thursday a $74
billion deal to buy Celgene in one of the biggest mergers in pharmaceutical
industry history.
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