A Not So Happy New Year for Drug Prices
2019 has barely begun, and already drug prices have gone up-meaning further hardship for consumers and underlining the need for congressional and executive action.
On New Year's Day, a number of drug companies raised the prices of hundreds of their drugs-the average increase, according to an analysis from Rx Savings Solutions, was 6.3%. The drug company Allergan especially stood out, increasing prices on twenty-seven drugs by 9.5% and on twenty-four drugs by 4.5%. These medicines included Restasis, a drug used to treat dry eyes. Allergan has stated that it will limit itself to one drug price increase per year, and that the rise will be under 10%. They kept their word, but not by much. And a couple of generic companies increased the costs of their drugs by more than 10%.
The most egregious increases were by Hikma, which increased the price of Ketamine (a painkiller) by 20% and increased the price of Enalaprilat (a drug used to treat high blood pressure) by 30.1%, and 7T Pharma, which increased the price of the painkiller Zingo by 133.4%. And Pfizer has announced that later this month it will resume its practice of increasing drug costs by around 10%.
The companies are able to increase costs because there are no checks on their power to engage in price gouging, and because there are powerful incentives to make greater profits and choose the most expensive drugs. Drug companies, pharmacy benefit managers (PBMs), and insurance companies all contribute to this problem, as does our incredibly opaque pricing system, as well as the widespread prevalence of rebates and discounts and the lack of effective regulation.
In the past, when confronted with abuses and exorbitant prices, drug companies and PBMs have grudgingly acknowledged mistakes and promised to clean up their acts, self-policing their behavior. But every time, the companies return to their old ways, and drug prices keep rising.
Fool me once, shame on you. Fool me twice, shame on me. Americans are rightly fed up with this state of affairs, and the new incoming Congress will hopefully have a substantial focus on drug prices. The Trump administration has taken some small but encouraging steps, and Senators and Representatives are planning to introduce bills to end patent abuse that blocks generic drugs, to require pricing transparency and disclosures for drug companies and PBMs, and to allow Medicare to negotiate lower drug prices.
We hope all these above reforms will pass, and that our drug pricing system will lead to affordable, accessible medicines for everyone.