Brand Drug Price Increase Outstrips Inflation

With pharmaceutical companies worrying about drug spending cuts they've increased the prices of branded drugs by 13%, far outpacing the 2% increase in inflation.

With pharmaceutical companies worrying about drug spending cuts they’ve increased the prices of branded drugs by 13%, according to a new report.

A study by Express Scripts revealed that the prices of branded drugs increased by six times more than the rate of inflation over the last year.

In particular, the cost of specialty drugs — treatments for cancer, rheumatoid arthritis and multiple sclerosis — saw huge increases, up 22.6% over the last 12 months. These specialty drugs accounted for 20.8% of total drug spending.

New and expensive hepatitis C drugs in particular contributed to the price jump, according to Express Scripts. Merck introduced Victrelis and Vertex introduced Incivek. The cost of hep C treatments was up 117.3%.

According to FierceBiotech, despite the large increases in prices, overall drug spending was kept, relatively, in check. The cost of generic drugs was actually down 21.9% year over year.

A large number of patents expired this year as the pharmaceutical industry went over the patent cliff. There were generic entries into the market of Pfizer’s Lipitor and Bristol-Myers Squibb and Sanofi’s Plavix.

According to Reuters, generic drug use in the United States is approaching 80%.

“There is great incentive for companies like Express Scripts to increase generic usage, not only to save client's money but because the profit margin is higher on cheap generics than with expensive branded drugs,” according to Reuters.