Drug Prices Increase by an Average of 5.8% for 2020

On January 1, 2020, more than 60 pharmaceutical companies raised list prices on hundreds of medications by an average of 5.8%. Nearly all price increases were below 10%, a threshold many drug manufacturers have pledged to stay under, following intense scrutiny from politicians and patients.

This year’s increase is also slightly lower than the average price increase seen last January, which hit 6.3%. However, more early-year price increases could still be announced. The industry typically sets prices for drugs at the beginning of the year and again midyear.

Bristol-Myers Squibb (BMS), for one, stated that it would not raise prices by more than 6% in 2020. It did set higher prices on 10 of its drugs, including a 1.5% increase on the Hodgkin lymphoma and solid tumor treatment nivolumab and a 6% price hike on the anticoagulant apixaban, as well as on the immunomodulatory drug lenalidomide, which was approved by the FDA for myelodysplastic syndromes in 2005 and which BMS acquired as part of its recent purchase of Celgene.

Of the companies announcing higher list prices, Pfizer had the largest increases, upping prices on more than 40 drugs by more than 9%. The largest hike was placed on its heparin products. The company said the 15% list price increase in heparin is meant to help expand capacity to meet market demand and offset higher costs of raw materials. Pfizer representatives added that, while its U.S. heparin supply isn’t sourced from China, the global heparin supply has been affected by African swine fever in China, as heparin is derived from pig products.

Pharmaceutical companies noted that most patients don’t pay these list prices for drugs, as these prices do not include discounts, rebates, and insurance payments. Representatives also explained that manufacturers increased prices in conjunction with the rebates the companies pay to pharmacy benefit managers to place their products on formularies and that they will be offset by higher rebates paid to insurers and middlemen.

Source: Reuters, January 1, 2020; The Wall Street Journal, January 2, 2020.