U.S. drug makers raise prices on more than 330 drugs

Eric Pachman

Several major U.S. drug manufacturers this week announced price increases for more than 330 drugs, and the price hikes in most cases have taken effect.

The price hikes affect name-brand drugs, and most of the increases are below 10% with an average of 5%, according to the Bellbrook-based firm 3 Axis Advisors, which focuses on identifying and analyzing U.S. drug supply chain inefficiencies and cost drivers.

The increases remain below 10% because under pressure from politicians and consumers, drug companies promised to cap their U.S. drug price increases at that rate.

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The number of drug price increases this year is below the 371 announced in the first two days during the the past five years, although more price hikes could be announced in the coming days, according to the news service Reuters.

While some consumers will feel the pinch, others will not notice the difference in prices, said Eric Pachman, president and co-founder of 3 Axis Advisors. Several factors will determine who’s affected and to what extent, including the type of insurance your employer has, and whether you’re in your deductible phase or not, he said.

It also depends on your co-pay or if the pharmacy benefit manager — PBM — chooses to pass on the rebate that they got from the brand manufacturer to the employer.

PBMs are an important part of the prescription drug supply chain, and they’re the biggest cogs in the middle, Pachman said. The three largest PBMs are OptumRx, owned by United Health; Caremark, owned by CVS/Aetna; and Express Scripts, owned by Cigna. They control the vast majority of the market, he said.

Those who are on Medicare Part D also may not notice the difference in the price increases because their prices are relatively low, Pachman said. However, some commercial employers are starting to switch to high-deductible health care plans with deductibles as high as $5,000; employees with those plans will definitely notice the difference, he said.

“If you are a consumer with a high-deductible health care plan, you are effectively paying the list price for that drug, Pachman said. “If you have no deductible at all, then your insurance plan will see the hit, but they’re more than likely negotiating rebates anyway to offset that, so you wouldn’t really see much of anything.”

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Small employers may not get the same generous rebates as larger companies, and that can affect how much employees pay for their prescription drugs, Pachman said.

Sam Juergens, whose family has owned the small, independent Madison Avenue Pharmacy in Springfield for many years, agrees. The price increases and drug stocking cost tend to be more taxing on small pharmacies like his family’s, and it makes it difficulty to stay in business. So they find a niche to make money in other areas while also giving their customers the best cash prices available, he said.

Pachman said it’s unfair that small companies don’t get the same deals as the larger ones, but this is how the system was designed. “It’s not the manufacturers’ fault alone. It’s not the PBM’s fault alone. It’s not the pharmacies’ fault, it’s the whole system together,” he said. “Right now, everybody wants to point fingers, it’s just not helpful, because it’s the whole system — not just not just one group.”

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