Drug Prices: We’ve Seen This Movie Before

As happened with cars in the 1960s, price competition among brand-name drugs is hard to find.

Before 1973, when the Arab oil embargo upended the U.S. auto industry, Americans witnessed an annual ritual by carmakers. In the late summer, the Big Three — Ford, Chrysler, and General Motors — would release sticker prices for their products, always showing increases, of course.

Almost always, the increases from each company for similar models were nearly identical. If one company’s was out of line — substantially bigger or smaller than its erstwhile competitors’ — it quickly made an adjustment. Explicit collusion to fix prices was never proven, but the effect for consumers was the same.

Now, researchers report that something very similar seems to be occurring for big-market brand-name drugs, including anti-diabetic medications and blood thinners.

Average wholesale prices for products in five classes — direct-acting oral anticoagulants (DOACs), P2Y12 inhibitors, glucagon-like peptide-1 (GLP-1) agonists, dipeptidyl dipeptidase-4 (DPP-4) inhibitors, and sodium-glucose transport protein-2 (SGLT-2) inhibitors — increased in “lock-step” each year from 2015 to 2020, according to Joseph Ross, MD, of Yale University in New Haven, Connecticut, and colleagues writing in JAMA Network Open.

These increases ranged from annual averages of 6.6% for DDP4 inhibitors to 13.5% for P2Y12 inhibitors — far outpacing not only inflation in general, but even the 2.1% average for all prescription drugs.

Within each class, Kendall τb correlation coefficients for average wholesale prices were as follows:

  • DOACs: 0.98
  • SGLT-2 inhibitors: 0.98
  • DPP-4 inhibitors: 0.96
  • GLP-1 agonists: 0.92
  • P2Y12 inhibitors: 0.75

“These results suggest there was little price competition among the sponsors of these products,” Ross and colleagues wrote.

Although the analysis came with significant limitations — it didn’t account for rebates or other discounts, for example — the researchers said some patients must suffer from these increases.

“Rebates, list prices, and net prices have been growing for brand-name medications, and rebate growth has been shown to positively correlate with list price growth, thereby impacting costs faced by patients paying a percentage of (or the full) list price, the group noted. “Therefore, the lock-step price increases of brand-name medications, without evidence of price competition, raise concerns and would be expected to adversely affect patient adherence to medications and thus clinical outcomes.”

For the car buyers, the solution to lock-step price increases was imposed from outside: soaring gas prices in the mid-1970s prompted demand for vehicles with better fuel economy than domestic makers were prepared to sell. That opened the market to Japanese cars that not only got better mileage, but were also more reliable and (in many cases) cheaper than Big Three products. Thus ended Detroit’s ability to set prices.

How to rein in Big Pharma is less clear. For their part, Ross and colleagues suggested policies to limit such lock-step price hikes, shortened patent exclusivity periods, and faster introduction of generic equivalents.

Cigna sues dozens of drugmakers in alleged price-fixing scheme

https://www.beckershospitalreview.com/pharmacy/cigna-sues-dozens-of-drugmakers-in-alleged-price-fixing-scheme.html?utm_medium=email

26 Generic Drugmakers Accused of Price-Fixing, 'Multibillion ...

Cigna, one of the country’s largest health insurers, filed a lawsuit this week accusing dozens of generic drugmakers of breaking national and state antitrust laws by fixing prices. 

The lawsuit, filed June 9 in a Pennsylvania district court, alleges the drugmakers conspired to fix, increase, stabilize or maintain prices of generic drugs, allocate customers and markets and rig bids for generic drugs in violation of federal and state antitrust and competition laws.

A similar lawsuit was filed by all 50 states June 10 accusing 26 drugmakers of a price-fixing scheme. 

Cigna wrote that the drugmakers orchestrated the conspiracy through secret communications and meetings. The scheme increased the drugmakers’ profits at the expense of many customers, including Cigna, the lawsuit alleges.

“This scheme to fix, increase, stabilize or maintain prices, allocate customers and markets, and rig bids for generic pharmaceutical drugs, and otherwise stifle competition caused, and continues to cause, significant harm to the United States healthcare system,” the lawsuit states.

Cigna is seeking damages incurred from overcharges it paid for generic drugs. 

Find the full lawsuit here.