Drugmakers May Be Delaying Price Hikes to Avoid Spotlight

(Bloomberg) -- With drugmakers under the microscope, price hikes on branded medicines are off to a slow start in 2019.

According to a Goldman Sachs analysis, prices were raised on about 27 percent of the top 500 branded drugs, down from 47 percent last year. The average list price increase was only 4 percent, half what it was in 2018. “The lower magnitude of brand price increases could present modest downside risk to wholesaler earnings,” health-care services analyst Robert Jones wrote in a note to clients.

Michael Rea, the founder and chief executive of RX Savings Solutions, anticipates that many pharmaceutical companies will wait to raise drug prices until after the first week of January, when most pricing activity has historically taken place. “People will play the game differently to avoid the spotlight and fly under the radar,” he said.

“We think it is worth noting that 98 percent of the annual January list price increases were taken by this time last year,” Raymond James analyst Elliot Wilbur wrote. “Clearly, more caution is in the air and many major multinationals such as Pfizer and Novartis, which found themselves making the headlines several months back, have yet to implement their January increases,” he said.

Wilbur suspects that many of the major drugmakers are taking a “wait-and-see approach,” although one player that hasn’t held off is Allergan. The maker of Botox and other aesthetic treatments as well as specialty medicines has increased prices on seven different product lines with a median increase of 9.5 percent, the same as last year, Wilbur said.

The Wall Street Journal reported more dramatic price hikes at Hikma Pharmaceuticals. Breaking the ban on single digit prices hikes, the London-based company boosted prices on some medicines by as much as 30 percent.

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