NEW YORK (Reuters) – Major drug manufacturers such as Pfizer, Sanofi, and Takeda Pharmaceutical are planning to increase the prices of more than 500 medications in the United States at the beginning of January, according to data analyzed by healthcare research company 3 Axis Advisors.
The data shows that prices for over 140 branded drugs will be raised next month when ignoring the various dosages and formulations.
The expected price hikes come as the pharmaceutical industry prepares for the Biden administration to release significantly reduced prices for ten expensive medications in September, and continues to struggle with higher inflation and production costs.
According to President Joe Biden’s Inflation Reduction Act (IRA), the government’s Medicare health program will be able to directly negotiate prices for some medications from 2026 onwards.
There is also growing concern about potential disruptions in the supply chain due to ongoing Middle East conflicts, as shippers may be forced to suspend or redirect traffic from the Red Sea, the world’s most crucial east-west trade route.
Three companies, including GlaxoSmithKline, which announced last week that they would reduce prices for some asthma, herpes, and antiepileptic medications in 2024, are also expected to lower the prices for at least 15 medications in January, according to the data.
The reductions come after several companies announced price cuts for insulins earlier this year to avoid penalties that could have been imposed under the American Rescue Plan Act 2021 if they had kept prices high.
According to the law, pharmaceutical companies are required to provide Medicaid with a discount if price increases for medicines exceed inflation, and as of January 2024, these rebates could be even higher than the actual net costs of the medicine.
„Every major former blockbuster insulin product will be adversely affected by this policy,“ said Antonio Ciaccia, president of 3 Axis.
Analyst Robyn Karnauskas, noted that Eli Lilly planned to reduce the prices of its insulins Humalog and Humulin by 75.8% and 70% respectively on December 30, and increase the price of its popular diabetes medication Mounjaro by 4.5% on January 30. These changes were not included in the data from 3 Axis.
The changes affect list prices, which do not include discounts for pharmacy benefit managers and other rebates.
Drug manufacturers generally held price increases to 10% or less, a practice followed by many major players since the mid-2010s when they faced criticism for too many price hikes.
Antonio Ciaccia said he had been expecting „full throttle“ due to inflation coupled with concerns about the US drug price negotiation plan in the IRA, „but basically, the last five years have been the same.“
According to 46brooklyn, a non-profit organization associated with 3 Axis for drug pricing, average price increases have been around 5% since 2019.
Pfizer announced the most price increases in January for at least a second year in a row, accounting for over a quarter of all medications with planned increases. The New York-based drug manufacturer will raise prices for 124 drugs and an additional 22 drugs in its Hospira subsidiary.
In addition to different dosages and formulations, prices for 30 and six branded drugs from Pfizer and Hospira, respectively, will be increased next month.
Baxalta, owned by Takeda, has announced the second-highest number of price increases, with 53 increases planned so far, followed by Belgian drug manufacturer UCB Pharma, which intends to raise prices for 40 unique drugs.
After various dosages and formulations are excluded, prices for eight branded drugs from Baxalta and six branded drugs from UCB will be increased next month.
Sanofi, which promised earlier this year to reduce prices for most of its prescription insulin products by 2024, will particularly increase prices for its typhoid, rabies, and yellow fever vaccines by 9% each in January.
More drug price increases are expected to be announced throughout January, which is historically the month when drug manufacturers most frequently raise prices.
According to 46brooklyn, drug manufacturers increased the prices of 1,425 medications in 2023, compared to 1,460 medications in 2022.
While drug manufacturers have scaled back their price increases for established drugs, prices for newly introduced drugs have reached record levels.
In 2022, the price for newly introduced drugs exceeded $220,000, compared to around $180,000 in the first six months of 2021, indicating an increase of over 20%. This is consistent with a study published by JAMA on drug prices, showing that drug introduction prices in the US increased by 20% annually between 2008 and 2021.
(Reporting by Michael Erman and Patrick Wingrove in New York, Editing by Josephine Mason and Mark Potter)