Drug Prices Set to Rise 6.3% in 2019, But Will They Stay Up?

Pharmaceutical companies face growing public backlash and political pressure after controversially raising prices of their drugs way ahead of inflation at the start of 2019.

Analysis from Rx Savings Solutions, reported on by The Wall Street Journal, showed that more than three dozen drug makers lifted prices on hundreds of medicines in the U.S. on Tuesday. The decision by many companies to introduce modest hikes was overshadowed by a few firms pursuing more aggressive action, according to Rx, leading to an average increase in drug prices of 6.3%.

Rx’s analysis revealed that some of the industry’s biggest price increases were for generic drugs, the cheaper alternatives to branded medicines that account for 90% of prescriptions filled in the U.S. The firm also discovered that Allergan PLC (AGN) is setting the pace. The Ireland-based company reportedly increased prices on more than two dozen of its products by nearly 10%.

Allergan later confirmed Rx’s findings, adding that it raised prices on 51 of its products, more than half its portfolio, by roughly 9.5% or 4.9%.

Among generic drugmakers, Hikma Pharmaceuticals is one of the companies with the largest price increases.

The War on Drug Price Hikes

More than 90% of American voters support regulating drug prices. The Democrats gaining control of the House has increased the chances of a war on drug prices in 2019. They have talked about their willingness to reach a deal with President Trump on major legislation, and they are pushing to allow Medicare to negotiate prices.

“We will take real, very strong legislative action to negotiate down the price control of prescription drugs that is burdening seniors and families across America," Democrat Nancy Pelosi, leader of the House of Representatives, said after the win.

President Donald Trump has been working on ways to combat rising prices, but his contribution has been more rhetoric than actual change. Trump, who shortly after being elected accused pharmaceutical companies of “getting away with murder,” unveiled plans in October to force drug companies to disclose list prices in their television advertisements.

“We think the stage is set for bipartisan action,” said David Mitchell, founder of the advocacy group Patients for Affordable Drugs, to The Hill in November.

“Combine the rising blue wave — the Democrat fixation on pharmaceutical pricing — with President Trump’s populist focus on getting credit for cutting patients’ drug costs, and the industry could be confronting a perfect storm in 2019,” John E. McManus, a Republican health care lobbyist, told The New York Times.

According to The Hill, potential 2020 Democratic presidential contenders are also revealing plans regarding drug prices. Senators Kamala Harris, Jeff Merkley and Amy Klobuchar introduced a bill enabling the Department of Health and Human Services to review and reject “unreasonable” drug price increases.

The Hill also reported that Senator Elizabeth Warren prepared a bill that permits the government to manufacture certain drugs and sell them at lower prices, provided that there is limited competition for them. Meanwhile, another Democrat, Senator Cory Booker, put together a bill designed to shine a light on pharmaceutical companies making payments to get their drugs covered by Medicaid.

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