Surprise! Drugmakers Are Raising Prices Again
(Bloomberg Opinion) -- In a move that should surprise precisely no one, drugmakers welcomed 2019 with significant price hikes, ending an industry-wide effort that lasted all of six months to pause or roll back increases in response to angry tweets and threats from President Donald Trump.
Dozens of pharmaceutical companies raised prices on hundreds of medicines, according to a Wall Street Journal report, with more increases to come. This was extensively telegraphed. Pfizer Inc. was the first to announce a price freeze last year, but said that hikes would return in January unless unlikely conditions were met. They weren’t, and here we are. Other firms, such as Merck & Co. made cosmetic changes like lowering prices on insignificant drugs, or, in the case of Roche Holding AG, touted temporary price freezes after having already finished planned hikes.
The resumption of pharma’s price-hiking practices, even if less extreme than in years past, show how little the industry has changed in the face of greater public and regulatory scrutiny. It’s unclear if Trump will react to January’s wave of price increases by calling out companies by name, as he did last summer. There are other things on his mind. But the industry’s swift return to business as usual highlights how cheaply Trump’s retreat from the drug-pricing bully pulpit was bought.
That’s not to say pharma has won the war: It will be a particularly adversarial year in the drug-pricing debate, and the industry isn’t helping itself by sticking largely to the status quo. Even moderating price hikes won’t provide much insulation as the industry fights stricter regulation. Increases for a whole lot of drugs are outpacing inflation, and most of the mark-ups come on top of compounded years of bigger boosts.
Democrats are back in control of the House of Representatives, which may bring heightened oversight and more aggressive drug-pricing bills. And then there are the Trump administration’s surprisingly robust efforts to reduce prices, including a controversial move to index the U.S. costs of certain drugs to the much lower prices charged abroad. The industry’s inevitable public and private lobbying against these proposed rules this year will likely bring it into conflict with the administration, and its pricing moves provide immediate fodder for criticism.
The industry seems to think that temporary appeasement and being slightly better than it was in the past will be enough to save it from increased oversight. But pharma’s conspicuous hurry to get back to its old ways only draws more attention to its unconstrained pricing power and lax self-regulation.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.
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