Drug price hikes could offset savings in bill
Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been quietly raising its prices at the fastest rate in years.
In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year.
The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.
Drug makers say they have valid business reasons for the price increases. Critics say the industry is trying to establish a higher price base before Congress passes legislation that tries to curb drug spending in coming years.
Drug companies say they have to raise prices to maintain the profits necessary to invest in research and development of new drugs as the patents on many of their most popular drugs are set to expire over the next few years.
“Price adjustments for our products have no connection to health care reform,’’ said Ron Rogers, a spokesman for Merck, which raised its prices about 8.9 percent in the last year, according to a stock analyst’s report.
The drug industry has actively opposed the cost-cutting provisions in the House legislation, which passed on Nov. 7 and aims to reduce drug spending by about $14 billion a year over a decade.
Drug makers have been proudly citing the agreement they reached with the White House and the chairman of the Senate Finance Committee this year to trim $8 billion a year - $80 billion over 10 years - from the nation’s drug bill by giving rebates to older Americans and the government.
But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement.
