Two weeks after President Trump in May unveiled a plan to lower drug prices for Americans, promising “it will start to take effect very soon,” the drug company Bayer hiked the list prices of two cancer drugs by more than $1,000 per month.
Bayer wasn't alone. A research note by Wells Fargo analyst David Maris found that although fewer drug-price increases occurred in May than in previous months, dozens of increases did occur.
“We believe drug pricing remains a risk for the pharmaceutical industry,” Maris wrote. “The President has highlighted lowering the cost of healthcare as a key objective and we do not expect the negative commentary around the cost of medicines will soon subside.”
Many of the price increases Maris tracked — particularly the double-digit-percentage increases — involved older, generic drugs. There were also price reductions on a slew of older medicines. But the 8 percent price increases that Bayer instituted are notable because the drugs, Stivarga and Nexavar, have already raised some concerns because of their cost. It is the second price increase for the two drugs in six months.
Stivarga, which is used for patients with colorectal, liver and gastrointestinal cancers, now carries a list price of about $16,860 per month. Nexavar, used in kidney, liver and thyroid cancers, carries a list price of about $18,670 per month. The prices for both drugs are now both 13 percent higher than they were during 2017.
“That is an exceptionally bold move to increase prices by over $1,000 a month on an already expensive set of cancer treatments, given the political context,” Stacie Dusetzina, associate professor of cancer research at Vanderbilt University Medical Center, said in an email.
Last month, Trump said that “a major drop in the cost of prescription drugs” was already happening. “I think we're going to have some big — some of the big drug companies in two weeks, and they're going to announce, because of what we did, they're going to announce voluntary, massive drops in prices,” Trump said.
Bayer spokesman Christopher Loder said in an emailed statement that Bayer believes in the value of its medicines.
“As we manage our current portfolio, we have to balance current operations, ensure broad access to novel medicines for patients, and continue development of more life-saving and life-changing medicines. In addition, Bayer offers numerous programs for patients who cannot afford their medicines,” Loder wrote.
More than a fifth of the patients on these two drugs get them free through a patient assistance program, according to Bayer, which said it will not take additional price increases on those drugs this year.
Some players in the drug industry, eager to avoid government intervention, have been keeping drug-price increases to single-digit-percentages each year. Health and Human Services Secretary Alex Azar has hinted that drug companies that raise prices without justification could find themselves the subject of unwanted attention from Trump.
“He's now laid down a marker about the need for reform. I can imagine he is going to be very interested in the next company that takes a price increase not justified by inflation or change in clinical benefits,” Azar, a former drug company executive, said in a speech in mid-May. “I can tell you I wouldn’t have wanted to be the one to do that.”
Pharmaceutical companies have sought to divert attention away from their list-price increases, because of their practice of granting secret rebates off the sticker price. They argue that insurers and pharmacy benefit managers determine how much patients pay for drugs.
Several companies have begun reporting their average net prices, showing that, in aggregate, net prices have been falling as rebates have increased. Reporting on price changes in 2017, Sanofi recently disclosed that the net prices of its drugs fell 8.4 percent; Janssen said that its net prices fell by 4.6 percent; and Merck said its net prices fell by 1.9 percent. Eli Lilly and Co. said its net prices rose by 6 percent. These disclosures have increased focus on the role of other players in the drug supply chain that negotiate those rebates and benefit from them.
The inspector general for the Department of Health and Human Services released a report this week that found that although Medicare's prescription drug program was paying for 17 percent fewer prescriptions over a five-year period, the amount it was paying had increased by 62 percent, after rebates.
“Increasing manufacturer prices for brand-name drugs may result in increasing costs for Medicare and its beneficiaries, especially those beneficiaries who need access to expensive maintenance drugs,” the report concluded.