Trump Get’s An “F” On Lowering Drug Prices (#GotBitcoin?)
Drugmakers have sharply boosted prices of some older, low-cost prescription medicines amid supply shortages and recalls—in some cases, by threefold and more. Trump Get’s An “F” On Lowering Drug Prices
Patients and pharmacies grapple with sharply higher costs for certain generic drugs..
The increases are leading to higher costs for hospitals, pharmacies and patients on what are generally cheaper generic drugs, including some widely used medicines.
At least three sellers of a popular blood-pressure medication, valsartan, have lifted prices since a series of safety-related recalls of the drug by other manufacturers began last summer.
Virtus Pharmaceuticals in May raised the U.S. price of a bottle of a muscle relaxant that has been in short supply, methocarbamol, to $105 from $8.49. The 1,137% increase was the biggest for a prescription medicine in 2018, according to a new analysis of pricing data.
Of the nearly 120 drugs listed by the Food and Drug Administration as currently or recently in shortage, about one-third had price increases after the shortages started, according to a Wall Street Journal review of pricing data provided by RELX Group’s Elsevier health-information unit. Virtus didn’t respond to requests for comment.
Drugmakers say the price hikes reflect higher costs they have incurred to help fill supply voids that have become relatively common in recent years.
Supply And Demand
Drugmakers have raised prices for several older, low-cost medicines that face supply shortages or product recalls.
Several valsartan-based medications have been subject to recalls since last summer, after the FDA said an active ingredient from a supplier in China contained a potentially cancer-causing impurity. The agency restricted imports from the company, Zhejiang Huahai Pharmaceutical Co. Companies including Mylan NV and Teva Pharmaceutical Industries Ltd. have collectively recalled millions of bottles or cartons of valsartan.
The drug is still available from companies that haven’t been subject to recalls, and some of these have raised prices significantly.
Alembic Pharmaceuticals Ltd. of India raised the prices of several valsartan products by between 340% and 469% in July. Alembic’s price for a bottle of 90 valsartan 80-milligram tablets jumped to $155.11 from $29.98, according to Elsevier.
In August, India-based Macleods Pharmaceuticals Ltd. boosted valsartan prices by 216% to 306%. The same month, AmerisourceBergen Corp.’s American Health Packaging unit of Columbus, Ohio, raised prices for valsartan products by 57% to 63%, according to Elsevier.
A spokesman for AmerisourceBergen said its prices are affected by prices of bulk product that it purchases and repackages for health-system pharmacies. Macleods and Alembic didn’t respond to requests for comment.
In October, Alembic managing director Pranav Amin told analysts on a conference call that “one of our roles is to create a nimble supply chain that can react quickly to market opportunities,” according to a transcript. “So we could respond very fast to the valsartan opportunity, and we could ramp up our supplies and we could get on the market at a high price.”
The prices reflect so-called list prices, and drugmakers contend the ultimate price is often lower because of discounts and rebates negotiated by pharmacy-benefit managers and other purchasers. But the average price that U.S. community retail pharmacies pay for valsartan tablets has also risen—to 31 cents a tablet from 10 cents in July, according to a Wall Street Journal review of data from a Centers for Medicare and Medicaid Services survey of pharmacies.
And many patients with high deductibles often wind up paying full list price or a share of the cost derived from the list price.
David Behrman, a Houston retiree, said he used to pay about $13 out-of-pocket for a 90-day supply of valsartan to treat his high blood pressure, under a Medicare prescription plan. But he had to switch to a different company’s version because of recalls, and his cost has jumped to more than $108.
“It’s always been pretty reasonable until recently,” Mr. Behrman said. He said he emailed a complaint to the manufacturer of his new valsartan, Endo International PLC.
A spokeswoman for Endo said the Dublin-based company hasn’t increased the price of valsartan recently, and it is possible the previous supplier of Mr. Behrman’s valsartan was charging a lower price. Mr. Behrman couldn’t recall the supplier.
Overall, manufacturers of older generic drugs have come under heavy pricing pressure, as buyers including pharmacies and group-purchasing organizations consolidate and negotiate lower prices.
When shortages arise, health regulators such as the FDA sometimes ask other suppliers to boost production.
If a company incurs costs to boost production, it might choose to pass that along to customers, or “just have prices rise as a function of capitalism,” said Rena Conti, associate professor of markets, public policy and law at Boston University’s Questrom School of Business. “More limited supply meeting inelastic demand should give a producer pricing leverage should they choose to exert it.”
A study published last year in the journal Value in Health found that average prices rose about 14% for drugs in shortages lasting at least 18 months, and 6% during shortages of less than six months.
Another drug in shortage for more than a year has been hydromorphone hydrochloride, an injected opioid for pain relief, partly because one of the main suppliers, Pfizer Inc.’s Hospira unit, experienced production delays, according to the FDA.
The FDA asked another supplier, Fresenius Kabi AG, to increase production, Matt Kuhn, a spokesman for the German company, said. In late December, Fresenius boosted prices for various versions of hydromorphone, including a 15% increase for a box of 10 vials, to about $90.
Mr. Kuhn said the price increase reflected costs to boost production. “We have to make a decision to meet customer demand and shift our prioritization,” he said. Fresenius has reduced prices for other drugs, he added.
In October, Fresenius Chief Executive Stephan Sturm told analysts on a conference call, “Our various investments are meant to put us in pole position to fill any rising shortage situation.”
Mr. Kuhn said that while some price increases for generic drugs are large in percentage terms, they remain relatively inexpensive compared with brand-name drugs. This month, Pfizer, Johnson & Johnson , Allergan PLC and other drugmakers are raising list prices on many brand-name drugs that generally cost more than generics.Go back