March 25th, 2011
Branded drug prices soar as generic pressure rises
U.S. prices for brand-name drugs are rising faster than ever as patents expire on top-selling medicines and the pharmaceutical industry nervously eyes the future of healthcare reform.
Prices for the 15 best-selling drugs rose by much higher rates in 2010 than they did in each of the last five years, according to exclusive data from Thomson Reuters MarketScan, which measured the average cost of a daily dose as shown in medical claims data.
Two thirds of the drugs saw double-digit price hikes, well above inflation of 1.6 percent in 2010 measured by the consumer price index. The analysis indicates drug makers are scrambling to make as much money as possible from blockbuster drugs before their patents expire, while taking advantage of the fact that last year’s healthcare reform bill did not cap drug prices.
According to MarketScan, payments for Pfizer Inc’s Lipitor rose 11.4 percent last year, compared with 5 percent annually from 2005 to 2010. That meant the cost of a daily dose of the cholesterol drug rose from $3.17 at the end of 2009 to $3.53 at the end of 2010. Lipitor, which will soon lose patent protection, had 2010 global sales of $10.7 billion.
Drugs with price rises in the mid teens included: cholesterol drug Crestor made by AstraZeneca Inc; blood-clot preventer Plavix sold by Bristol Myers Squibb Co and Sanofi-Aventis; and asthma treatment Singulair, from Merck & Co.
AstraZeneca’s antipsychotic drug Seroquel topped the list with a 16.5 percent price jump, according to MarketScan data, which is particularly telling since it comes from actual payments by insurers, rather than manufacturer list prices.
Insurers often get a discount on the list price—but the fact that they are paying more for drugs is likely to push up the premiums they charge at a time when healthcare costs are already rising much faster than inflation.
“The price escalation is truly incredible,” said Judy Cahill executive director the Academy of Managed Care Pharmacy, a pharmacy trade group. She said that since drugs generally make up about 10 percent of medical spending, they are often not a top priority for cost-cutting.