Take a Look Back on Big Pharma’s Year of Price Hikes And Skyrocketing Launch Prices
With each new year comes a time-honored tradition for Big Pharma: Hiking prices on hundreds of brand name prescription drugs in the first two weeks of January.
As Big Pharma’s next round of January price hikes approach, we can take a look back at a year of bad behavior for the pharmaceutical industry and be reminded why policymakers must hold brand name drug companies accountable to lower drug prices.
We’ll start this series with a review of Big Pharma’s egregious pricing practices in 2023, including continuing to hike prices faster than the rate of inflation, bringing new drugs to market with skyrocketing launch prices and colluding with each other to raise vaccine prices.
Get a Dose of Reality on Big Pharma’s year of egregious pricing practices:
2023 PRICE INCREASES
Biannual Price Hikes
In 2023, Big Pharma maintained the industry’s tradition of hiking prescription drug prices in two large batches – one to begin the year in January and the other around the mid-year mark in July.
In January, brand name drug companies hiked prices on 587 brand name drugs by an average of 5.5 percent. In July, Big Pharma followed this up by increasing prices on more than 100 prescription drugs.
Examples of Big Pharma price hikes in 2023 include:
Price Hikes Exceeding Annual Rate of Inflation
In December, the Biden Administration announced that Big Pharma increased prices faster than the rate of inflation on 48 Medicare Part B drugs in the last quarter of 2023. A fact sheet released by the White House noted more than 750,000 American seniors rely on the prescription drugs, covered by Medicare Part B, that Big Pharma hit with price hikes outpacing inflation in the quarter.
The December announcement from the Biden-Harris Administration follows a November analysis released by the Center for American Progress (CAP), which found that Big Pharma increased prices on 112 medications above the annual inflation rate this summer. CAP examined a dataset from Patients for Affordable Drugs of all drugs that faced price increases above one percent and compared those price increases to the Consumer Price Index for All Urban Consumers.
Some of the most egregious price increases in CAP’s analysis included a 34 percent increase by Big Pharma giant Pfizer and its subsidiary Hospira on Lorazepam, an anti-anxiety medication, as well as a 478 percent increase by Blue Water Biotech on Entadfi, a medication that treats benign prostatic hyperplasia.
Unjustified Price Hikes Dramatically Increase Costs
Also in December, The Institute of Clinical and Economical Review (ICER) released a new analysis which found that brand name drug makers’ unjustified price hikes on just eight prescription medications cost the U.S. an additional $1.2 billion in 2022.
ICER’s most recent Unsupported Price Increase Report examined substantial price hikes on prescription drugs without any new clinical evidence or improvements to justify the increases. Several pharmaceutical giants were on this year’s list of top offenders, including AbbVie, Johnson & Johnson, Pfizer, and Amgen, underscoring that Big Pharma’s price hikes are about boosting these companies’ profits, not delivering innovation or value for patients.
Here are some takeaways from the ICER analysis:
TARGETING VACCINES FOR EGREGIOUS PRICE INCREASES
Throughout the year, Big Pharma also targeted vaccines for egregious price increases, including existing vaccines for COVID-19 and new vaccines for respiratory syncytial virus (RSV).
COVID-19 Vaccine Price Hikes Ahead of Commercial Distribution
Following much speculation throughout the year – and promises to investors – in September, Pfizer and Moderna officially announced they would be setting the list price of their COVID vaccines between $120 and $130 as payment shifted from the federal government to the commercial market.
Moderna’s new price amounted to a 500 percent increase over its previous price point while Pfizer almost quadrupled the price of its vaccine to a price that represents a “10,000 percent markup over what experts have estimated it costs the vaccine makers to produce the shots.”
The price hikes are especially egregious given taxpayers’ investment into the development and previous acquisition of the shots. For example, the U.S. Government funded research that led to some of the underlying technology behind Moderna’s vaccine and taxpayers later provided an almost $10 billion investment to help develop and purchase doses of Moderna’s vaccine which allowed the company to rake in massive profits.
Targeting a New Category for Price Hikes: RSV Vaccines
Before new RSV vaccines were even available to patients, Big Pharma manufacturers had started scheming to increase their prices.
In May, the U.S. Food and Drug Administration (FDA) approved two RSV vaccines for older Americans, GlaxoSmithKline’s (GSK) Arexvy and Pfizer’s Abrysvo.
Ahead of Arexvy’s approval, GSK said it anticipated pricing the shot somewhere between $60 and $185. Immediately following FDA approval, GSK indicated their price would land in the higher end of the range, above $120.
Then, as Pfizer shared a price range of $180 to $270 with advisors for the U.S. Centers for Disease Control (CDC), GSK shared a new range, increasing their projected price to be between $200 and $295 — despite indicating a high-end of $185 just weeks before.
At the subsequent CDC advisor meeting, Pfizer hinted at further increases to the price of their shot by refusing to even commit to staying within the range they offered. “Among other concerns, some of the committee members were unhappy that Pfizer would not commit to a price for its vaccine,” CNN reported.
The two brand name manufacturers already driving up prices across a new category of drug smacks of a Big Pharma tactic called “shadow pricing.” This tactic involves pharmaceutical companies working together to increase the price of similar products around the same time to elevate the price of a category of medications, which forces payers and patients to pay the increased price.
The most notorious example of Big Pharma engaging in “shadow pricing” deals with insulin products. According to a 2021 Senate Finance Committee report, over the course of several years, the three largest manufacturers of insulin – Novo Nordisk, Sanofi and Eli Lilly – worked in lockstep to increase prices on insulin products around the same time, preventing patients from accessing lower cost alternatives.
SETTING RECORDS FOR NEW LAUNCH PRICES
Several studies released this year reveal just how much Big Pharma has been increasing launch prices on new products in recent years.
Median Annual Launch Price in 2022: $222,003
In January, Reuters released an analysis which found that the median annual price among drugs approved by the FDA in 2022 exceeded $200,000. In the second half of 2022, the median price of the 17 novel drugs approved by the FDA was $193,900, bringing the median annual price among all drugs approved in the year to $222,003.
The analysis built on an earlier Reuters analysis which found that Big Pharma was on track for record-breaking launch prices in 2022 after 13 novel drugs used to treat chronic conditions entered the market in the first half of the year with a record-setting median annual price of $257,000 – significantly higher than the $180,000 mark set over the same period in 2021.
Median Monthly Price for Newly Approved Drugs Tripled In 11 Years
In March, The Wall Street Journal released a report further detailing the extent to which brand name drug makers are increasingly targeting higher launch prices for new products as a way to circumvent heightened attention around the pharmaceutical industry’s price increases.
The analysis found that the median monthly price for a newly approved drug nearly tripled from 2011 to 2022 – increasing from $2,624 to $7,034.
Examples of high launch prices highlighted in The Wall Street Journal’s report include:
BIG PHARMA’S NEW “GOLD RUSH”: OBESITY MEDS
As Big Pharma simultaneously sells the breadth and vitality of its R&D pipeline to investors while continually trumpeting apocalyptic predictions that drug pricing solutions would destroy innovation and stifle their profits, an entirely new class of medications are set to create a boon in new revenue for the industry – obesity drugs.
A New Frontier For Big Pharma’s Same Old Pricing Practices
As 2023 comes to a close, one of the biggest stories in the drug pricing space this year has been a new “gold rush” for Big Pharma around weight loss drugs. Several Big Pharma companies have launched new products in this space or received approval to prescribe older products for this new category. It’s increasingly becoming clear, however, that Big Pharma is sizing up this new market for a business-as-usual approach to price-gouging: including targeting the U.S. for the highest prices in the world and setting egregious prices amid widespread interest and demand.
Targeting The U.S. Market With Highest Prices In World
An August analysis from the Peterson-KFF Health System Tracker analyzing the price of several new weight loss drugs in the U.S. compared to other wealthy countries found that list prices for these drugs, including Novo Nordisk’s Ozempic, Wegovy and Rybelsus products, as well as Eli Lilly’s Mounjaro, are significantly higher in the U.S.
According to the Peterson-KFF Health System analysis, across all four drugs analyzed, U.S. patients are charged significantly more than other, comparable countries that are part of the Organization for Economic Co-operation and Development (OECD). For example, Ozempic has a list price of $936 for a one-month supply in the U.S. In Japan, where Ozempic has the next highest list price, the price for a one-month supply is $169. This means U.S. patients are being charged more than 5.5 times for the same drug.
The list price for Rybelsus in the U.S. is $936 for a one-month supply. The next highest price compared to other countries is $203, in the Netherlands, meaning U.S. patients pay more than four times more for this product. For Wegovy, the U.S. list price is $1,349, while the next highest price in a comparable country is $328 in Germany, again meaning U.S. patients pay more than four times more than the next comparable country for the same prescription drug.
Major Implications For The Medicare Program
While currently Medicare does not provide coverage for weight loss drugs, according to a March study in the New England Journal of Medicine, if the program did, it could have major implications for U.S. health care spending.
According to the paper, if just 10 percent of Medicare beneficiaries were prescribed one new weight loss drug, Novo Nordisk’s Wegovy, the annual cost to Medicare could range from $13.6 billion to $26.8 billion. According to KFF coverage of the paper, “[h]igher take-up rates would mean higher Medicare spending.”
As policymakers return to Washington in 2024, they should take note of the pharmaceutical industry’s continued egregious pricing practices, reject Big Pharma’s bogus rhetoric attempting to evade responsibility and shift blame for high prices and advance bipartisan, market-based solutions to hold Big Pharma accountable.
Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.
And stay tuned as we continue to review Big Pharma’s bad behavior from this past year throughout the week.