Drugmakers to Increase Prices on Over 500 Drugs in January
According to an exclusive report by Reuters, several major pharmaceutical companies, including Pfizer, Sanofi, and Takeda Pharmaceutical, are set to raise prices on more than 500 drugs in the United States in early January, according to data analyzed by healthcare research firm 3 Axis Advisors. The anticipated price hikes will affect more than 140 brands of drugs, excluding different doses and formulations.
The pharmaceutical industry is gearing up for the Biden Administration to release significantly discounted prices for 10 high-cost drugs in September, while grappling with increased inflation and manufacturing costs. Under President Joe Biden’s Inflation Reduction Act (IRA), the government’s Medicare health program will be able to negotiate prices directly for certain drugs starting in 2026.
Worries about potential disruptions to supply chains due to a prolonged conflict in the Middle East are also contributing to the pricing decisions, as shippers may need to reroute or halt traffic from the Red Sea, a critical East-West trade route.
Notably, three companies, including GlaxoSmithKline, are expected to lower prices on at least 15 drugs in January. GlaxoSmithKline had previously announced its intention to cut prices on some asthma, herpes, and anti-epileptic drugs for 2024.
The industry has seen several companies announce price decreases for insulins earlier in the year to avoid penalties under the 2021 American Rescue Plan Act. According to the law, drug companies are required to rebate the Medicaid program if price increases on medicines surpass inflation, and starting in January 2024, these rebates could exceed the actual net cost of the drug.
3 Axis President Antonio Ciaccia noted that major former blockbuster insulins could be significantly affected by this policy. Some companies, including Eli Lilly, are planning to lower the prices of certain insulins.
Despite concerns about inflation and the potential impact of the IRA, drugmakers have largely kept price increases at 10% or below. Median price increases have hovered around 5% since 2019, according to data from drug pricing non-profit 46brooklyn, affiliated with 3 Axis.
Pfizer leads in the number of price increases for January, accounting for more than a quarter of all planned hikes. The company will raise prices on 124 drugs, with an additional increase on 22 drugs at its Hospira arm. Takeda-owned Baxalta and Belgian drugmaker UCB Pharma also announced a significant number of price increases.
While established drug prices have seen more moderate increases, prices for newly launched drugs have hit record levels. In 2022, the price of newly launched drugs exceeded $220,000, suggesting a more than 20% increase from the first half of 2021.
The pharmaceutical industry is expected to announce more drug prices throughout January, historically the biggest month for such announcements. In 2023, drugmakers raised prices on 1,425 drugs, a slight decrease from the 1,460 drugs in 2022. SEE: List of Cities with Most & Least Expensive Prescription Drug Prices
