Mounting bipartisan pressure on large pharmaceutical industry players regarding their pricing practices have prompted drug makers such as Johnson & Johnson (JNJ) and Merck & Co. (MRK) to release reports on their medicines’ price increases.
This week, the multinational consumer goods, medical devices and pharmaceutical giant, Johnson & Johnson, followed the example of Merck & Co., which released a similar report in late January. It seems that the argument the two New Jersey-based businesses seek to bring home through the reports is that there’s more than meets the eye to drug pricing.
J&J and Merck’s reports offered numbers outside the list prices that are made public, including data on discounts and rebates paid to the healthcare system, to government insurers and middlemen in the pharma supply chain. Over the past five years, J&J says while its list prices have surged 10%, its net prices after discounts and rebates have increased less than half that rate. In 2016, Merck indicated its prices rose an average 9.6%, lowering to 5.5% when factoring in rebates.
Fed Up With ‘Unreasonable’ Drug Costs
While many drug companies, such as Allergen, Novo Nordisk and AbbVie have committed to drug price increases of less than 10% annually, consumers are still struggling with the situation. A recent Kaiser Health poll found 77% of respondents believed drug costs were “unreasonable” in September 2016. A wave of controversies surrounding price hikes for the EpiPen and most recently a drug for children with a unique type of muscular dystrophy, has further ignited the public to demand federal government negotiations with drug companies to lower Medicare prices.
J&J and Merck have both pledged to release these reports annually, hoping that with greater transparency on what portion each player in the supply-chain receives, critics will back off. While the reports may help, the battle against big pharma surely isn’t going anywhere soon, as a rising number of Americans agree with both liberal activists and President Donald Trump—that drug companies are “getting away with murder.” (See also: Merck Restates 2016 Earnings, Takes $3B Charge.)