2016 Starts With Double Digit Price Increases



The double down is a blackjack maneuver where the player is given the chance to double their winnings by agreeing to double their bet and take only one more card for the rest of the hand.  It can be risky, but, in the right situation it can be a big win for the player.  It is also a colloquial expression describing when a person or group reinforces their position, often in the face of mounting opposition.

For the last several years, drug companies have celebrated New Year’s Day by raising the prices of many of their brand name drugs. This year was no exception, unbowed by recent public pressure, Pfizer alone raised prices on over 100 drugs. The drug companies collective strategy is a classic double down. Despite heated rhetoric on the Presidential campaign trail and disastrous PR headlines about price gouging, Big Pharma raised prices across the board taking effect on January 1st.

No Regulation = No Risk

The double down in blackjack involves increased risk, but a strict comparison to raising drug prices may not be appropriate in this case. The drug giants have weathered the storms of the fall, even though Martin Shkreli launched public ire and congressional committees. The companies have heard the politicians, they have read the op-ed articles, and they have concluded there is no risk in continuing to raise prices further.

“The new increases despite this criticism ‘signals there’s still pricing power,’ Jefferies analyst David Steinberg said in an interview [with the Wall Street Journal]. ‘Unlike other countries, there’s no mechanism whereby regulatory authorities can control price.'”

The United States allows these companies to act with impunity. With no regulatory authority there may be an outcry and heated political rhetoric, but these are only words without any agency. FiercePharma.com recently reported the findings of researchers at Tuveris, who have completed their analysis on the 2015 prescription price numbers.

“Branded prescription drug prices went up 14.5% last year overall. Pricey specialty drugs went up by 9.2%. The company’s price index covers private insurers, self-insured groups, government programs and uninsured patients. The increases were on par with those seen in 2014, Truveris says, showing that the price hikes highlighted last year weren’t isolated occurrences. In fact, 2015 was the third year in a row with double-digit price increases.”

No Slowing Down…

The cost trendline continues to climb higher and it’s showing no signs of correction. With an election year and a divided congress there will be no political opportunity to address these problems this year, but that has been true every year since the passage of the Affordable Care Act. Medicare Part D was the last major legislation that specifically addressed prescription drugs, and it failed to have any price controls. Pfizer’s price increases averaged 10.6% January 1st.

If Pfizer merges with Allergan, the new company would be the world’s largest drug manufacturer and would be headquartered in Ireland. This tax inversion would shelter the company from US corporate taxes. Raising the prices of drugs in the United States, while leaving the country, and dodging its taxes is a breathtaking display of greed and civic negligence. Tax inversions have been called “unpatriotic” by President Obama, criticized by the democratic candidates and Donald Trump.

There are no shelters for public and private payers in this storm of rising costs. No regulatory white knight or cavalry will be coming from congress this year. Public outcry can help shame bad actors into talk of discounts and defensive statements about research and development costs, but that won’t pay the bills. Insurance companies and providers need new solutions because they are bound by the ACA.

After the first few weeks, it appears 2016 will be another year with potentially double digit prescription price increases. With Big Pharma doubling down US payers can’t afford to “let the chips fall where they may.” It is time to reduce exposure to rising costs with prescription decision support solutions like those provided by RxREVU. The RxCheck platform can help payers, providers and IDNs adjust to the current market environment by lowering the prescription drug burden. For more information, visit: https://rxrevu.com.