As the pharmaceutical industry, led by Pfizer Inc.’s proposed $100 billion takeover of AstraZeneca Plc, is in the throes of the greatest period of consolidation in a decade, one reality remains unchanged: Drug prices keep defying the law of gravity.
Since 2007, the cost of brand-name medicines has surged, with prices doubling for dozens of established drugs that target everything from multiple sclerosis to cancer, blood pressure and even erections, according to an analysis conducted for Bloomberg News. While the consumer price index rose just 12 percent in the period, one diabetes drug quadrupled in price and another rose by 160 percent, according to the analysis by Los-Angeles based DRX, a provider of comparison software for health plans.
Analysts, meanwhile, predict the first $1 million per year d.rug treatment may be just around the corner.
The recent wave of acquisitions may push prices even higher, suggests Robert Kemp, an economist at the University of Louisiana at Monroe. The more drugs a company has in a specific therapeutic area, he said, the more ability it may have to maintain higher prices when negotiating with payers.
Desperation is one driver for the increases, with drugmakers raising prices on products that remain under patent to offset sales dropped from blockbusters that have lost patent protection. Opportunity is another, as companies with older drugs boost prices when rivals show up, either to match the price of the newer drug or to make up for lost prescriptions.