Drug prices quietly rise as politicians pounce

Data Insights

After a year of anti-pharma rhetoric from US politicians, it might be assumed that the sector would want to lie low on price increases at least until after the presidential election. The evidence shows that such an assumption would be misplaced.

An analysis of drug prices shows that while pharma companies have been more reluctant to use monopoly power to push through huge increases in 2016, in more competitive markets the rises have been every bit the equal of 2015’s (see tables below). And despite its drubbing last year and promises to change its ways, Valeant is still a notable presence on this year’s list (After Turing, the industry’s biggest price gougers, September 23, 2015).

This finding means that the reintroduction of Auvi-Q announced yesterday may not yield any additional relief for the severely allergic patients who need an emergency epinephrine injector. Indeed, Kaléo has little incentive to come in much below the $300 per pack list price pledged for the authorised Epipen generic announced in August by Mylan, the biggest drug-pricing villain of 2016 (EpiPen’s new lease of life a Mylan windfall, March 2, 2016). 

Modest brands

These lists are taken from EvaluatePharma’s US pricing analysis, based on the federal government’s National Average Drug Acquisition Cost weekly survey of pharmacy level prescription drug costs. They are ranked on the biggest percentage change between the second quarters of 2015 and 2016.

It does not incorporate additional rebates over the NADAC price, nor include drugs administered in hospitals. However, it provides a snapshot of drugmakers’ pricing strategy over a recent 12-month period.

No generic availability
Product Company FDA approval  Price increase*
Cuprimine Valeant  1970 +330%
Leukeran Aspen Pharmacare 1957 +95%
Alinia  Romark Laboratories 2002 +87%
Primsol Aytu BioScience 2000 +69%
Altabax Almirall 2007 +58%
*Pharmacy acquisition cost, Q2 2016 vs Q2 2015. 

A big change from the last time EP Vantage did this analysis is the magnitude of the biggest increase among the products with no generic competitors – just a 330% jump for chelating agent Cuprimine compared to 2015’s huge 928% for beta blocker Dutuprol. And instead of six with triple-digit increases, as in 2015, Cuprimine was the only one in 2016.

This suggests that the bad publicity and political pressure has yielded some moderation, at least in this space of older or off-patent branded drugs that have yet to see competition.

Cuprimine is sold by Valeant, the speciality pharma embattled over its pricing and distribution practices. As he sought to reassure investors and the public about its strategy earlier this year, former chief executive J. Michael Pearson said “any future price increases will be more modest and in line with industry practices and managed-care contracts.”

 Generics available
Product Company FDA approval  Price increase*
Locoid Valeant  1987 +786%
Benzamycin Valeant  1984 +679%
Zegerid  Salix 2006 +620%
Librax Valeant  1961** +478%
Metrogel-Vaginal Valeant  1992 +351%
*Pharmacy acquisition cost, Q2 2016 vs Q2 2015.
**Year launched

That statement is belied by this analysis, which finds that six Valeant products appear in these analyses of the biggest price increases.

Competing to raise prices

One of those six, the skin cream cream Locoid, saw the single biggest increase. A product with a generic equivalent, Locoid saw its price rise a staggering 786%. That was matched by an exactly identical percentage increase for Taro’s hydrocortisone butyrate, ie generic Locoid. A similar pattern was seen with Valeant’s Benzamycin and Tolmar’s generic equivalent, erythromycin and benzoyl peroxide.

Generics
Product Company FDA approval  Price increase
Hydrocortisone Butyrate Taro  2004 +786%
Ofloxacin Valeant 
Apotex
2008
2007
+747%
Leflunomide  Emcure 
Apotex
Alembic
2005
2005
2011
+706%
Erythromycin and Benzoyl Peroxide Tolmar 2004 +679%
Naproxen Boehringer Ingelheim 1994 +565%
*Pharmacy acquisition cost, Q2 2016 vs Q2 2015. 

Counterintuitively, it was this more competitive area of branded products with generic equivalents where Valeant and its comrades were most successful in pushing through price increases. Cuprimine’s 330% jump was exceeded by the top five price increases in both the category of branded drugs with generic competition and the category of generic drugs.

With this many triple-digit increases, it is no wonder that pharma has become such a lightning rod for criticism and that both major US presidential candidates agree on some policies to bring drug prices under control. Among major industry leaders, Allergan’s Brent Saunders appears to be responsive to this criticism and has vowed to keep price increases to less than 10% a year.

Yet despite Mr Pearson’s pledge, Valeant can still be seen pushing the public’s tolerance for fast-rising drug costs. If his successor, Joseph Papa, is intent on following words with deeds, at this time next year Valeant’s name will not be listed in this analysis.

To contact the writers of this story email Jonathan Gardner or Edwin Elmhirst in London at news@epvantage.com or follow @ByJonGardner or @EPVantage on Twitter

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