U.S. Branded
Drug Prices
Soar as
Generic
Pressure
Rises
Pharmaceutical
industry
nervously
eyeing the
future of
healthcare
reform
LOS ANGELES
& SANTA FE,
NM
By Deena
Beasley,
Reuters)
March 25,
2011 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 2010 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
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.
IMS Health
estimates
that $25.4
billion in
U.S. drug
sales are at
risk of
generic
competition
this year as
patents
expire on
iconic
brands like
Lipitor and
Plavix.
Another
$26.1
billion in
sales
about 9
percent of
the $300
billion
market
will lose
patent
protection
next year.
"Because of
the
increased
number of
drugs going
generic,
they profit
more from
the brand
drugs on the
market by
increasing
prices,"
said Nancy
Stalker,
vice
president
for pharmacy
services at
health plan
Blue Shield
of
California.
Everett
Neville,
vice
president of
pharma
strategy at
Express
Scripts Inc,
which
manages drug
benefit
programs for
health
insurers and
employers,
said drug
makers
typically
raise prices
for drugs as
they
approach
patent
expiration,
but "what we
have seen
over the
last few
years are
bigger
increases
for products
that are
early or
mid-way in
their patent
cycle."
Drug
manufacturers
have an
exclusive
right to
sell new
products for
up to 20
years from
the date of
a U.S.
patent
filing. Once
the patent
expires, a
number of
generic
copycats
typically
enter the
market,
driving down
prices.
IMS
estimates
the U.S.
healthcare
system will
reap at
least $70
billion in
savings over
the next
four years
as
brand-name
medicines
are replaced
by
lower-cost
generics.
But until
there is a
generic
competitor,
there is
very little
pushback on
the U.S.
price of a
brand-name
drug.
"There are
hundreds of
health
insurance
plans, so
each of them
individually
does not
have a whole
lot of price
leverage,"
said Joshua
Cohen,
professor at
the Tufts
Center for
the Study of
Drug
Development
in Boston.