Healio Special Report: Health Care and Politics
Healio Special Report: Health Care and Politics
January 10, 2020
3 min read
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2020 opens with new drug price hikes, little hope for legislation

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Robert Freeman
Robert A. Freeman

Despite pressure from the Trump administration and Congress to curb rising drug costs, pharmaceutical companies — in what has become a common industry practice — have begun January 2020 by instituting a bevy of price increases.

As of Jan. 9, the prices of 499 drugs have increased by an average of 5.2%, 492 brand drugs have increased by an average of 5.3% and seven generic drugs have increased by an average of 8.2%, according to researchers at GoodRx. Meanwhile, the cost of rheumatology drugs such as Humira (adalimumab, AbbVie) and Cosentyx (secukinumab, Novartis) have jumped by a whopping 7.4% and 7%, respectively.

According to Robert A. Freeman, PhD, a retired professor of social and administrative sciences at the University of Maryland Eastern Shore School of Pharmacy & Health Professions, these figures represent a continuation of the previous year’s trend — January 2018 saw 486 brand-name drugs increase their price by an average of 5.2%. However, with dramatic increases in drug prices and the subsequent political backlash driving so many headlines last year, Freeman expressed some surprise that manufacturers have yet to temper these annual increases.

 
As of Jan. 9, the prices of 499 drugs have increased by an average of 5.2%, 492 brand drugs have increased by an average of 5.3% and seven generic drugs have increased by an average of 8.2%.
Source: Adobe Stock

“They are raising prices in the face of political opposition on both sides,” Freeman told Healio Rheumatology. “The amounts of the increases have been a little surprising to me. I thought there would be some moderation in price increases as a result of all of the political opposition in the Congress to these price increases — I thought there would be a bit more restraint.”

Still, Freeman added that it is common for drug companies to raise prices when they anticipate that new regulations or legislation may be likely to curtail their ability to increase prices in the future. He noted that the FDA’s 2019 issuance of its final guidance on biosimilars, meant to promote competition in the biologic market, fits that description.

Announced in May, the FDA’s final guidance clarified guidelines for developers who want to prove that their “interchangeable” biologics meet the statutory interchangeability standard under the Public Health Service Act. The move was part of the FDA’s larger Biosimilars Action Plan.

“We now have a clear policy on the development and approval of biosimilars by the FDA, which means they are going to have more competition,” Freeman said. “The change is that the regulations now are very transparent, and there doesn’t have to be the high degree of uncertainty that there was previously. So, it’s natural to expect that the prices would go up.”

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Additionally, although these price increases likely could take months to be felt by individual patients, those with rheumatic diseases may eventually feel themselves financially squeezed, and opt to skip necessary treatment due to cost, Freeman added.

“Among rheumatology drugs, the injectables are covered under Medicare Part B, for drugs that are administered in the office,” he said. “They typically have a coinsurance rate of 20%, so I think one of the unfortunate effects you are going to see is the cost-sharing requirements for patients becoming more of a burden. There is always a possibility that you will see some patients foregoing treatment, because they simply can’t afford the coinsurance rate.”

Recently proposed regulations and pending legislation to address rising drug costs have ranged from President Donald Trump’s 2018 proposal to allow Medicare to determine a drug’s price based on its cost in other countries, to a bill passed by Democrats in the House of Representatives in December 2019, which would empower the government to directly negotiate drug prices and cap prices at 1.2 times their cost in other countries.

However, Freeman said it is unlikely that any drug pricing legislation will be approved before the 2020 general election.

“It has a snowball’s chance in hell of passing,” he said. “The probability of anything passing is going to be up to the White House and Congress being controlled by one party. That is basically how we got the Affordable Care Act. It seems like Americans like to see an impasse, with a president of one party and a Congress controlled by the other so they can sort of moderate each other.”

“However, if the Democrats won the presidency and controlled the Congress, I would expect some pretty tough controls over prices and reimbursement,” he added. “If the Republicans win, you would get something, but it’s probably not going to be as Draconian as what the Democrats would have done.” – by Jason Laday

Disclosure: Freeman reports no relevant financial disclosures.