By Peter Loftus
Drugmakers didn't let up on price increases with the start of a
new year, demonstrating the industry's pricing power in the face of
mounting criticisms of prescription costs in the U.S.
Pfizer Inc., Amgen Inc., Allergan PLC, Horizon Pharma PLC and
others have raised U.S. prices for dozens of branded drugs since
late December, with many of the increases between 9% and 10%,
according to equity analysts. The increases are on list prices,
before any discounts or rebates that manufacturers sometimes
provide insurers and other payers.
Some of the increases add thousands of dollars to the cost of
already expensive drugs, and come on top of repeated price hikes in
recent years.
Vanda Pharmaceuticals Inc. on Jan 1 raised the price of its new
drug Hetlioz, which treats a sleep disorder in blind people, by
10%, to $148,000 a year, a spokeswoman said. Piper Jaffray analysts
say the price of the once-daily capsule is now 76% higher than when
it was introduced in 2014.
The Vanda spokeswoman said the cost of Hetlioz is "within the
price range of treatments that address similar size populations,"
noting that fewer than 1,000 patients currently take the drug in
the U.S.
Since New Year's Day, Pfizer has raised list prices an average
of 10.6% for more than 60 branded products with annual U.S. sales
of at least $10 million, according to Deutsche Bank. Prices for
eight of the products went up at least 20%. Pfizer also left prices
unchanged for about 10 products.
A Pfizer spokesman said the company offers "considerable
discounts" off the list prices, and the company provides medicines
for free to patients meeting income criteria.
In recent years, it has been common for drug companies to push
through annual price increases in at least the high single digits
around Jan. 1 for many brands--and in some cases additional
increases throughout the year--analysts said. But this latest round
of price hikes is significant in light of the political
pressure.
Politicians, health-care payers, doctors and patients have
criticized drug pricing in recent months, saying medicines are out
of reach for many patients and straining health-care budgets. U.S.
prescription-drug spending rose 12.2% in 2014, accelerating from
2.4% growth in 2013, the Centers for Medicare and Medicaid Services
said last month. Presidential candidates Hillary Clinton, Bernie
Sanders and Marco Rubio have attacked drug prices, and proposed
various measures to rein them in.
The new increases despite this criticism "signals there's still
pricing power," Jefferies analyst David Steinberg said in an
interview. "Unlike other countries, there's no mechanism whereby
regulatory authorities can control price."
Mr. Steinberg said rebates and discounts are likely to partly
offset some of the latest price increases, but companies typically
don't make public the magnitude of such concessions.
Repeated increases in list prices eventually can wipe out the
value of prior discounts, said Rick Bruzek, vice president of
pharmacy services at HealthPartners, a Bloomington, Minn., insurer
and hospital operator. "Really, you're swimming upstream," he
said.
Amgen raised the price of the anti-inflammatory drug Enbrel by
8% in late December, according to Raymond James, following an 8%
increase in September and a 10% increase last May. Enbrel costs
about $704 a week for the typical dosing for treatment of
rheumatoid arthritis, according to CMS, or more than $36,600 a
year.
The drug's new cost is about four times its cost at launch in
the 1990s, said Raymond James analyst Christopher Raymond. The
price hikes for Enbrel and other drugs "seem to have increased in
magnitude and frequency," he said.
An Amgen spokeswoman said the price of Enbrel reflects its
clinical benefits, while helping fund "continued scientific
innovation."
Mary Brainerd, chief executive of HealthPartners, said
drug-industry practices "are becoming increasingly intolerable for
consumers, health plans, doctors and hospitals."
Drugmakers say they need to raise prices to fund risky research.
Acorda Therapeutics Inc. raised the price of its drug Ampyra, which
is used to help multiple-sclerosis patients improve walking, by 11%
on Jan. 1, to an annual cost of more than $23,650 a patient.
Acorda offers rebates and discounts off the list price that are
likely to cut about 40% from the latest price increase, on average,
Chief Executive Ron Cohen said in an interview. The company has
raised the price several times since the drug was approved in
2010.
Dr. Cohen said it took more than a decade to develop Ampyra. He
said Acorda is developing additional drugs for conditions including
Parkinson's disease. Ampyra generated $315 million in sales for the
first nine months of 2015, or 87% of total company revenue.
The price hikes are "our way of insuring that we can survive and
develop these programs and bring these new innovative drugs to
market," he said.
Allergan, which has agreed to be acquired by Pfizer for $160
billion, boosted prices by an average of 9.1% for more than 40
brands so far this year, and left unchanged prices for about 20
other brands, according to Deutsche Bank. The increases included
9.9% hikes for eye drug Restasis, the company's second
highest-selling product after wrinkle-smoother Botox, and Namenda
XR, a treatment for Alzheimer's disease. Botox went up 3.8%.
An Allergan spokesman confirmed the price increases but declined
further comment.
Horizon Pharma boosted prices for five drugs by 9% to 9.9%,
Jefferies said, including ActImmune, a treatment for hereditary
diseases. The company's price increases were the subject of a
page-one article in The Wall Street Journal last year.
A Horizon spokesman said pricing for its products "isn't a key
driver" of its business, and that the company provides financial
assistance to help patients afford its drugs.
There were some notable exceptions to the price increases.
Valeant Pharmaceuticals International Inc., which came under fire
last year for sharply raising prices, hasn't raised prices since
September, according to Deutsche Bank.
A Valeant spokeswoman said changes in the company's product
lineup have made pricing a smaller part of its expected sales
growth. Valeant canceled nearly all of its planned price increases
for the fourth quarter, and expects future price hikes to be more
modest, she said.
Write to Peter Loftus at peter.loftus@wsj.com
(END) Dow Jones Newswires
January 10, 2016 20:18 ET (01:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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