Despite the fanfare with which the White House unveiled its "American Patients First" initiative earlier this year, it appears American pharmaceutical giants didn't get the memo, and are still going ahead with their annual "price modifications." As the Financial Times reports, Pfizer, the largest drug company in the US, has raised prices on 100 products.
The price hikes were announce just weeks after President Trump claimed that US drug companies would soon announce "massive" voluntary price cuts. Pfizer's decision "threatens to fuel the backlash over the soaring cost of medicines used in the US" as the price increases hit some of the company's most popular drugs, including erectile-dysfunction drug "Viagra" (the "little blue pill").
The increases are effective as of July 1. In most cases, the increases are just over 9%, which is in line with the annual 10% price hikes adopted by most drug companies. Putting that number in context, core inflation printed at 2% last week.
While news of the price hikes occupied the headlines, Pfizer would like consumers to know that its price "modifications" also included lowering the prices of five drugs by between 16% and 44%. According to the FT, this is Pfizer's second round of price hikes this year.
Drug prices were a major issue during the 2016 campaign, with both Trump and his Democratic opponent Hillary Clinton. Last year, Trump accused the pharmaceutical industry of "getting away with murder." However, one insider pointed out that it's "business as usual" for the pharmaceutical industry as, when accounting for the increases in price as of January, some drug prices have risen by almost 20%.
"The latest increases signal that it is 'business as usual' rather than the voluntary concessions that Trump indicated were coming," said Michael Rea, chief executive of Rx Savings Solutions, which makes software that helps employers and health insurers lower the amount they spend on prescription drugs.
Viagra and Chantix have endured price hikes of 20% and 17%, respectively, so far this year. Pfizer defended its decision by arguing that the "list price" for most of its inventory remains untouched. Furthermore, insurers and customers rarely pay the sticker price.
Pfizer said: "The list price remains unchanged for the majority of our medicines. We are modifying prices for 10 per cent of our medicines, including some instances where we’re decreasing the price."
"List prices do not reflect what most patients or insurance companies pay," the company added, pointing out that the net price increase - which accounts for discounts and rebates — was expected to be in the “low single digits."
In response to scrutiny from politicians, most pharmaceutical companies have switched from raising drug prices twice per year to raising prices once per year, and Pfizer certainly hasn't been the only company to hike prices this month. Of course, bringing the pharmaceutical companies to heel will be no easy task for the administration, as the industry spends more on lobbying than the next two biggest spenders combined.