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Rising drug prices drive US manufacturers’ revenues, analysis finds

BMJ 2015; 351 doi: https://doi.org/10.1136/bmj.h5376 (Published 07 October 2015) Cite this as: BMJ 2015;351:h5376
  1. Michael McCarthy
  1. 1Seattle

Drug price rises are contributing three times more to US drug company revenues than are increases in the volume of their prescription sales, shows an analysis of corporate filings and industry data conducted by the Wall Street Journal.

The analysis,1 reported on 5 October by the newspaper’s biotechnology reporter, Joseph Walker, found that wholesale price increases among the 30 top selling drugs sold by pharmacies in the United States averaged 76% from 2010 through 2014—more than eight times the general rate of inflation.

Walker wrote, “Attention has focused lately on new drugs with eye popping prices and on a few whose price a new owner abruptly raised several-fold. But what many drug companies rely on for sales growth is a pattern of steady increases, year in and year out, on older medicines.”

Companies can often increase the price of a drug even when demand is declining because, if the drug is still under patent protection, consumers may have no other choice, Walker added.

Prescriptions for the Novartis cancer drug imatinib (Gleevec), for example, rose only 2% over the five years studied, but its wholesale price doubled to $102 000 (£67 000; €91 000) for a year’s supply. “The price increases helped to drive Novartis’s US revenue from the drug up 69% over the period, to $2.17bn in 2014,” Walker wrote.

In another case, when the injectable multiple sclerosis drug interferon beta-1a (Avonex) began losing market share to newer oral treatments its manufacturer, Biogen, was still able to maintain its revenue from the drug by raising its wholesale price from $9200 for a year’s treatment to $62 000, Walker noted.

He wrote, “Pharmaceutical companies defend their pricing as helping to finance development of innovative medicines, an expensive and risky enterprise they say wouldn’t attract investment without the potential for large returns when a new drug succeeds.”

Walker noted that, because insurance often covers most of the cost of prescriptions, patients may not be concerned about price increases. “Neither doctors nor patients typically have much of a sense of drugs’ prices. That blunts what economists call price sensitivity, the tendency of higher prices to curb demand,” he wrote.

Notes

Cite this as: BMJ 2015;351:h5376

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