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News & Press: National

Drugmakers find competition does not keep a lid on prices

Tuesday, November 29, 2016   (0 Comments)
Posted by: Shannon Glaittli
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Wall Street Journal (11/28/16) Rockoff, Jonathan

Even when there is competition in the pharmaceutical industry, drug prices can continue to climb. That is because patients tend to stick with a drug that works for them, and health insurers and PBMs sometimes have contracts for drugs that prevent switching to cheaper options. "You're not rewarded for having a low price and for the most part, the market doesn’t punish a high price," says Mick Kolassa, who has advised pharmaceutical makers and government health care programs on pricing. The freedom to raise, rather than slash, prices in the face of competition is a major reason why U.S. prescription-drug spending has surged by close to 10% on average annually in recent years to $310 billion in 2015, according to QuintilesIMS Institute for Healthcare Informatics. Tandem drug-price increases for ailments have prompted lawmakers to call for investigations into potential collusion. This month, Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) wrote the Justice Department and Federal Trade Commission requesting an investigation of whether insulin makers "have colluded or engaged in anticompetitive behavior" in setting prices. Companies just watch a competitor increase a price and then "take a similar one," says Richard Evans, a former pricing official at Roche Holding AG's U.S. pharmaceuticals business who is now an analyst for SSR Health LLC. Read More

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