Are Big Rx Price Increases Actually Going Extinct?

--Terri Bernacchi, PharmD, MBA Most headlines these days (targeted at the Consumer) lament the egregious price hikes that some generic companies are taking that are passed along to the payer and the patient.  The stories cite the opportunistic, usurious price hikes taken on “old” products.  There is little mentioned in these stories of the problems with Medicaid/ Best Prices and some of the generic purchasing patterns that have fostered this environment.  (For example, see the link:     http://time.com/money/4551222/generic-drugs-more-expensive-than-brand-name/)  Then, when looking at the Trade Journals, you get a different picture when looking at Brand product price increases.   For example, in a FiercePharma article entitled, “Branded drug prices softening big time, distributors warn” by Eric Palmer on Oct 31, 2016, the author notes that “…drug distributors McKesson ($MCK) and Cardinal Health ($CAH) are sounding a warning for the industry: price hikes are slowing, price hikes are slowing. As a result, so are their earnings.”    For example, the article quotes Allergan’s CEO Brent Saunders reacting to the “growing hue and cry over prices with a promise to cap drug price increases as part of a “social contract” with patients, explaining the move in a full-page ad in The New York Times.”    He notes that “McKesson’s Hammergren said that it is too early to speculate about what will happen long-term or whether a change in administration in the White House will lead to ongoing pricing practices. Still, he said, the big price hikes of the near past look to be history.” It might be that the US health care system that grown accustomed to highly available and cheap generics and higher cost brands taking double digit price increases every year is undergoing fundamental change from within.  Perhaps the “go to market” cost of branded products and “price protection” terms in rebate and pricing agreements are also tamping down price increases after a product’s market entry.  (See the link to the article:   http://www.fiercepharma.com/manufacturing/branded-drug-prices-softening-big-time-distributors-warn)

Terri Bernacchi is the Founding Partner of SME Health Systems and Cambria Health Advisory Professionals.  Terri has had a varied career in health related settings including: 9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years of experience as founder and primary servant of a health technology company which was sold to IMS Health in late 2007.  She has both a BS and a PharmD in Pharmacy and an MBA.  Contact Information:  Phone: 262-893-9049  Email:  terrib@healthadvisoryprofessionals.com