Purchase Drug, Increase Price, Rinse, Repeat

posted by Alicia Caramenico

on April 27, 2015

Steep price increases aren’t just products of hospital mergers. Massive price hikes are hitting patients as part of the wave of pharmaceutical consolidation too, according to a new Wall Street Journal article.

How do post-merger drug price increases play out for patients? “It seemed like highway robbery,” said Erin Fox, who directs the drug-information service at University of Utah Health Care, after a drug merger resulted in a price jump for a pain injection. “After the increase, three of the Salt Lake City health system’s four hospitals were spending as much as $55,000 a month on the drug, up from $20,000 to $25,000 a month, Ms. Fox said.”

No improvements are made to the drugs; no moves are made as to where the drug is manufactured. What changes is the price tag. As the Wall Street Journal explains it: “For drug companies, price hikes offer an easy way to boost sales without years of costly, risky research to find new medicines.”

After Valeant bought the high blood pressure treatment Nitropress, it raised the price by 212 percent to roughly $806 a bottle. Valeant also purchased the heart drug Isuprel and sent the price soaring 525 percent to about $1,347 a vial.

The Wall Street Journal also shows how the price of Vimovo skyrocketed following Horizon Pharma’s purchase. Horizon immediately raised the price of the pain medication by 597 percent to $959 for 60 tablets. One year later, it increased the price again to $1,678. What’s more concerning is that Vimovo essentially is a combination of two over-the-counter anti-inflammatory drugs that patients can buy for about $4 and $20 without a prescription at their local pharmacy, according to WCNC.

In addition to medications to treat pain and heart problems, the same price hike occurred with hepatitis C drug Solvadi under the guise of innovation. Gilead didn’t develop Sovaldi; it purchased the company that did the research and development to create the breakthrough. It also took Pharmasett’s projected $36,000 price and increased it to $84,000 for a single course of treatment.

And for all of their rhetoric about R&D, what a lot of these companies seem to be good at is innovative business practices that help them increase prices without hesitation. Case in point: A new study in the journal Neurology found the prices of older multiple sclerosis drugs continued to rise significantly even as new treatments became available. “If the prices for the older drugs hadn’t been raised so dramatically, the newer drugs would have had a more difficult time pricing them as high as they did,” study co-author Dennis Bourdette, chair of the neurology department at Oregon Health & Science University, said in another Wall Street Journal article. “What they’re doing is feeding off each other in terms of how the prices are set.”

These pharmaceutical industry trends are more proof that it’s not about R&D costs anymore and it’s not about medical innovation. It’s about jacking up the price for patients.

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