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By Jared S. Hopkins
Pharmaceutical companies are ringing in the new year by raising the price of hundreds of drugs, with Allergan PLC setting the pace with increases of nearly 10% on more than two dozen products, according to a new analysis.
Many companies’ increases are relatively modest this year, amid growing public and political pressure on the industry over prices. Yet a few are particularly high, including on some generics, the cheaper alternative to branded accounting for nine out of 10 prescriptions filled in the U.S. Overall, price increases, including recently restored price increases from Pfizer Inc., continue to exceed inflation.
More than three dozen drugmakers raised the prices on hundreds of medicines in the U.S. on Tuesday, according to an analysis from Rx Savings Solutions, which sells software to help employers and health plans choose the least-expensive medicines. The average increase was 6.3%, according to the analysis, including increases on different doses for the same drug.
Allergan confirmed the increases cited in the analysis, saying it raised the price of 51 products—27 by about 9.5% and another 24 by about 4.9%. The increases covered more than half of its portfolio, from an extended-release version of its Alzheimer’s drug Namenda to dry-eye treatment Restasis. Of the companies analyzed, Allergan had the most increases of more than 9%.
Chief Executive Brent Saunders had announced in 2016 that Allergan would limit itself to one price rise a year on its medicines, and keep those increases under 10% as part of a “social contract” with patients. Allergan said Tuesday that it is “committed to responsible pricing principles” outlined in that pledge. Allergan applied price increases just below 10% on some of its products also at the start of 2017 and 2018.
Among generic drugmakers with the largest increases, Hikma Pharmaceuticals HKMPY -6.65% PLC raised the price of pain drug morphine by 10%, anesthetic ketamine by 20% and blood-pressure medication enalaprilat by 30%.
Steve Weiss, a spokesman for Hikma, noted that the increases for the three drugs came to less than $1 per vial, with the morphine price rising by about 20 cents per vial. “These are small increases that enable us to continue operating a sustainable business that serves hospitals, doctors and patient needs for high quality medications,” Mr. Weiss said. He added that the company also lowered the prices of some drugs.
Other drugmakers that raised their prices generally issued more-modest increases. GlaxoSmithKline PLC confirmed it raised the prices on 36 drugs, although none exceeded 3%. The company said it remains “committed to providing differentiated, needed medicines and price them according to the value they bring to patients, while being sensitive to the market and societal expectations.”
Drug pricing remains a hot topic that is expected to draw increased attention from Democrats when they take control of the House this week. Pharmaceutical companies are under the spotlight over the cost of their drugs, with pressure coming from patients, insurers and the Trump administration.
“The reason it can keep happening is there is no market check, no person or entity to bring reason to determining drug prices,” said Michael Rea, CEO of Rx Savings Solutions. Clients of the Overland Park, Kan., company include Petco and Blue Cross & Blue Shield of Kansas City.
The increases affect “list prices,” which are set by manufacturers, although almost no patient pays these prices because they don’t take into account rebates, discounts and insurance payments. Drugmakers said they raise prices in conjunction with rebates they give to pharmacy benefit managers in order to be placed on formularies.
Both parties have called for more disclosure on drug prices, and the Trump administration has proposed requiring that companies include list prices in their television ads. The drug industry has pushed back on that.
Umer Raffat, an analyst at Evercore ISI, said the increases this year appear to be modest, similar to the past couple of years, as the industry adjusts to pressures on drug pricing. He said the “magic number” for most list-price increases seems to be 6%.
“In general, the industry has started to self-police itself,” he said in an interview. “They heard a lot of the pushback.” Mr. Raffat said that many companies haven’t taken increases in 2019 yet and expected more to come. The start of the year is the traditional time for the industry to set prices.
Pfizer has already announced plans for later this month to resume its practice of raising drug prices, increasing the list prices of 41 of its prescription drugs, or 10% of its portfolio. Pfizer rolled back some increases over the summer due to pressure from President Trump.
Last year was a trying one for Allergan, as its shares dropped about 30% over the last three months of 2018 amid investor concerns over the performance of the company. It said in May it would explore selling its women’s-health and infectious-disease businesses. It also drew calls from activist investors for changes in management.
Restasis, which sold $872 million through the first three quarters of 2018, is expected to face generic competition later this year. Allergan didn’t raise the price of many of its medical aesthetics brands, including blockbuster anti-wrinkle treatment Botox. These products are typically paid out-of-pocket by patients.
Allergan said it expects to realize no net increase in prices, as rebates and discounts given to insurers, pharmacy benefit managers and government programs continue to grow. The company said the rebates and discounts are paid to ensure access to its products and help lower patients’ out-of-pocket costs.
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Corrections & Amplifications
Allergan raised prices on 24 products by about 4.9%. An earlier version of this article incorrectly stated the increase was 4.5%.