Will Patients Benefit From Pharma's Pause on Drug Price Increases?

Last week, drug manufacturer Merck announced that it will be taking part in several strategies to establish “responsible pricing” going forward, joining the ranks of some of the latest companies taking similar actions, including Novartis and Pfizer.
Samantha DiGrande
July 23, 2018
Last week, drug manufacturer Merck announced that it will be taking part in several strategies to establish “responsible pricing” going forward, joining the ranks of some of the latest companies taking similar actions, including Novartis and Pfizer.

However, the question remains whether patients will be able to feel any cost savings from halts to price hikes; several analysts have shared doubt about Merck’s drug pricing plan, stating that the company’s pricing strategy remains comparable to its regular strategy. The pricing announcement included a pledge not to raise the average net price across its drug portfolio beyond the rate of inflation, but according to Vamil Divan, a Credit Suisse analyst, this is not a change from previous strategy because “we do not believe they have been getting much more than this level of net pricing in recent years anyway,” reported Fierce Pharma.

In addition, Merck announced that it would be cutting the price of elbasvir/grazoprevir, sold as Zepatier, for the treatment of hepatitis C, by 60% under this new initiative. Notably, this drug has historically struggled to compete with cheaper, shorter-course treatments available elsewhere on the market, in addition to there being a lack of newly eligible patients as highly effective medicines are reducing the number of patients who require treatment. According to Merck’s first-quarter earnings for 2018, Zepatier’s sales were $131 million, or nearly $100 million lower than anticipated.

Merck also announced that it plans to cut the price of 6 products by 10%, including finasteride (Proscar) for the treatment of prostate cancer, and carbidopa-levodopa (Sinemet) for the treatment of Parkinson disease, among other products. However, the combined sales of these 6 products amounted to less than 0.1% of Merck’s total sales in 2017, according to Evercore ISI analyst Umer Raffat, also as reported by Fierce Pharma.

This pricing announcement was joined by a similar pledge from Roche to delay hiking prices for the rest of the year. However, according to Bloomberg, the company had already instituted the second of its usual 2 annual increases at the time of the announcement.

Roche notified the US government of its intentions on July 11, stating that the health system needs to focus on “long-term, system-wide solutions that lower costs [and] we’re committed to being part of the solution.” However, already in July, Roche had raised the prices of 9 medicines by an average of 3%, including those of its top 3 drugs, trastuzumab (Herceptin), rituximab (Rituxan), and bevacizumab (Avastin), all products that are targeted by biosimilar developers.

In a statement, Roche said its US unit’s annual average net price increase, weighted by sales, has been about 3%, which is in line with the medical consumer price index.



 

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