More Manufacturers Freeze Drug Prices: Will Positive Momentum Last?

July 26, 2018

Are recent pharma price drops just a response to political pressure or will the momentum last? Managed Healthcare Executive asked industry experts, and here’s what they said.

In the midst of President Trump’s plan to lower drug prices for consumers and shaming Pfizer over price jumps, several pharma makers such as Novartis and Merck are saying that they will try and limit drug price increases.

Are these drops just a response to political pressure or will the momentum last? Managed Healthcare Executive asked industry experts, and here’s what they said.

Daniel B. Vukmer, Esq, CEO, Tampa Bay Health Alliance, LLC, and chief strategy officer, USF Health:

“I think what we’re seeing is an aberration based on short-term political pressures and nothing more. Regardless of price freezes or reductions (which are not historically new) per capita spending on prescription drugs has continued to rise for more than 20 years and I don’t anticipate a long-term reduction."

Michael Thompson, president & CEO, National Alliance of Healthcare Purchaser Coalitions:

“We welcome this respite in drug price increases, but are concerned about the longer-term implications of these limitless pricing strategies. There needs to be action to foster greater competition where possible and insist on greater pricing equity across the globe. Limitless pricing, even on high value drugs, is breaking the affordability of the entire U.S. healthcare system.”

Kimberly Lenz, PharmD, clinical pharmacy manager in the University of Massachusetts Medical School's Office of Clinical Affairs:

“Several other drug manufacturers have come forward with similar pledges-mostly window dressing. While they may sound good at face value, there are a lot of caveats to these pledges or the timing of their pledge that limit their impact. Merck pledged to reduce prices by less than or equal to 10% for their medications, but it does not include some of their blockbuster drugs including Keytruda or Januvia; and they announced a 60% price drop on Zepatier, which has already been replaced by other newer HCV therapies. Roche hiked cancer drug prices before pledging to keep them flat. They raised nine medications prices in early July, including Herceptin, Rituxan and Avastin. In general, we need more than these ‘pledges.’ We need a more systematic change in order to solve the affordability problem in our rapidly changing pharmaceutical landscape."

Bonnie Greenwood, PharmD, BCPS, clinical program director in the University of Massachusetts Medical School's Clinical Pharmacy Services:

“Although I want to believe these pledges will have a real impact, I am skeptical that they amount to a public relations response to ongoing consumer ire and public shaming by government officials. I appreciate that Scott Gottlieb has been quite vocal about addressing drug prices and hope continued efforts by the FDA will begin to make some headway on this issue.”

Chris Skisak, executive director, Houston Business Coalition on Health:

“This seems to be a momentary pause in pricing gouging made out of political necessity rather than a true re-evaluation of how prices are set. Looking at price increases in line with medical inflation as the benchmark does not help. Even if the drug companies freeze their prices it does nothing to address the current lack of transparency to the purchaser (consumer and employer) in the market. It is no accident that pharmaceutical middlemen are now near the top of the S&P 500. The Trump Administration may have caused a momentary pause in price increases, but it should not be lost to the consumer that the stock value of the all major drug companies rose after the “

was released and I think it will be a while until we know all of the ramifications.”

Joseph Honcz, RPh, MBA, vice president, Payer Access Solutions for Precision for Value:

“It happened in the 1990s and it’s happening again today. No, not the reemergence of high-waisted flare jeans, but pharma’s pricing response in light of strong political rhetoric. As noted in a 2006 RAND study, during the early 1990s, pharma moderated price increases as a way to avert regulations to great success. The recent pullback by Pfizer and the softened stance of Novartis appear to be similar guideposts from the 1990s for the rest of the industry to heed in order to avoid regulation. And like the flare jeans of the 90s, if successful, the recent pharma pricing actions may soon fade away. That being said, this isn’t your typical administration and one should consider the potential for increased durability of the various tactics they are considering from public shaming to re-importation and beyond. The winners in this are partly the consumer but mainly the pharmacy benefit managers who already have reached flat if not negative trends.”

David Pittard, managing principal, OneDigital: 

“It’s not a surprise that two of the largest drug manufacturers [Novartis and Merck] are trying to tamp down criticism for the recent pricing practices. This signaling will likely leverage other competitors to follow suit, which is a welcome sign for employers and health plans. In recent years, prescription drugs must be one of the only ‘goods’ in the market where new entrants provide credence for existing suppliers to raise the price. When Norvartis rolled out Cosentyx a few years ago, Amgen and AbbVie immediately increased the prices of Enbrel and Humira, respectively.  The result of the new prescription has been over a 200% price increase for the existing medications in a five-year period-I’m certain General Motors would like to increase the price of Cadillacs 200% just because Hyundai is now making luxury cars. Historically, drug manufacturers have justified their high prices for having to compensate for years of R&D, public sector health plan reimbursements, and limited patent rights. That could be more justified in the initial years of the drug being released into the market; but, significant increases many years later is unjustified.”