(Added details from analyst note on Eli Lilly price cuts and rises in paragraph 10) by Michael Erman and Patrick Wingrove
Drugmakers including Pfizer PFE.N , Sanofi SASY.PA and Takeda Pharmaceutical 4502.T , plan to raise prices on more than 500 drugs in the United States in early January, according to data analyzed by the healthcare research firm 3 Axis Advisors.
Excluding different dosages and formulations, more than 140 drug brands will see their prices increase next month, according to the data.
The price hikes are expected as the pharmaceutical industry prepares for the Biden administration to release sharply reduced prices for ten expensive drugs in September, and as it continues to face rising inflation and manufacturing costs.
Under President Joe Biden’s Inflation Reduction Act (IRA), the public health program Medicare will be able to directly negotiate the prices of certain drugs starting in 2026.
Concerns are also growing over further disruption to supply chains from protracted conflict in the Middle East, with shippers forced to halt or reroute traffic across the Red Sea, the world’s main east-west trade route .
Three companies, including GlaxoSmithKline GSK.L , which said last week it would cut prices on some asthma, herpes and epilepsy drugs for 2024, are also expected to cut prices on at least 15 drugs in January, according to the data.
These reductions come as several companies have already announced price cuts for insulins earlier this year, to avoid penalties that could have been imposed under the American Rescue Plan Act of 2021 if they had maintained prices at a high level.
Under the law, pharmaceutical companies are required to reimburse the Medicaid program if drug price increases exceed inflation – and starting in January 2024, these reimbursements may even be higher than the actual net cost of the drug.
“All the old blockbuster insulins are going to be thrown under the tires of this policy,” said Antonio Ciaccia, president of 3 Axis.
Robyn Karnauskas, an analyst at Truist, said in a note that Eli Lilly LLY.N plans to lower the prices of its Humalog and Humulin insulins by 75.8% and 70%, respectively, on Dec. 30, and increase the price by its popular diabetes drug Mounjaro by 4.5% on January 1. These changes were not reflected in the 3 Axis data.
The changes relate to list prices, which do not include pharmacy benefit manager discounts or other discounts.
The drugmakers did not immediately respond to requests for comment.
10% OR LESS
Drugmakers have largely kept increases to 10% or less – an industry practice followed by many big players since they came under fire for too many price hikes in the middle of the last decade.
Even high inflation rates have not prompted drugmakers to accelerate their price increases for products already launched.
Mr. Ciaccia said he had assumed last year that because of inflation and concerns over the U.S. IRA drug price transaction plan, “we would see a blow proverbial pedal to the metal”. But the last five years have been essentially the same.”
Median price increases have hovered around 5% since 2019, according to data from 46brooklyn, a drug pricing nonprofit linked to 3 Axis.
For at least the second year in a row, Pfizer announced the largest number of price increases in January, accounting for more than a quarter of all drugs for which increases are planned. The New York manufacturer will increase the prices of 124 drugs and will apply an additional increase to 22 drugs from its subsidiary Hospira.
Excluding different dosages and formulations, Pfizer and Hospira will increase the prices of 30 and six branded drugs, respectively.
Takeda-owned Baxalta announced the second highest number of price increases, with 53 hikes planned to date, followed by Belgian manufacturer UCB Pharma UCB.BR, which intends to increase prices by 40 unique medications.
After updating the various dosages and formulations, eight Baxalta branded drugs and six UCB branded drugs will see their prices increase next month.
Sanofi, which committed to reducing the prices of most of its insulins prescribed at the start of the year in 2024, will notably increase the prices of its vaccines against typhoid fever, rabies and yellow fever by 9% each in January.
Other drug prices will likely be announced during January, which is historically the month when drugmakers raise prices the most.
In 2023, drugmakers raised prices on 1,425 drugs, down from 2022, when they raised prices on 1,460 drugs, according to data published by 46brooklyn.
While drugmakers have scaled back their price increases for established drugs, prices for newly launched drugs have reached record levels.
In 2022, the price of newly launched drugs exceeded $220,000, compared to around $180,000 in the first six months of 2021, an increase of more than 20%. This matches a study published in JAMA on drug prices, which showed that between 2008 and 2021, introductory drug prices in the United States increased by 20% per year.