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Despite Pressure from Trump and Lawmakers, Drug Prices Keep Rising

Yuval Rosenberg
President Trump is considering issuing a broad executive order to slash the prices of brand-name prescription drugs covered by Medicare Part D and other government programs, Reuters reports:“The order under discussion would be much broader than the Administration’s previously disclosed proposal to lower prices on physician administered, or Part B, drugs by tying prices to lower costs in other countries.“The administration is now looking at ways to use this or a similar method to lower prices in Medicare’s much larger Part D, which is for widely used prescription drugs patients take at home, such as for cholesterol and blood pressure, the sources said.”The order reportedly could come within weeks, and it could cover the military health care plan as well as the Department of Veterans Affairs. But the administration may hold off if it looks like the drug pricing legislation put forth by Sens. Chuck Grassley (R-IA) and Ron Wyden (D-OR) gains bipartisan momentum (see below).The federal government spent nearly $100 billion on prescription drugs through Medicare Part D in 2016, Reuters says.Like what you're reading? Sign up for our free newsletter.

Prescription drug prices are surging in 2019, despite pressure from the Trump administration and lawmakers on pharmaceutical companies and public anger about the cost of medications.

CBS News’s Aimee Picchi reports: “So far in 2019, more than 3,400 drugs have boosted their prices, a 17% increase compared with the roughly 2,900 drug price increases at the same time in 2018, according to a new analysis by Rx Savings Solutions, a consultant to health plans and employers.” The data is preliminary, and the pricing picture could still change when more information is available.

The average price hike for those drugs over the past six months has been 10.5%, smaller than the 15% for the same period last year but still about five times the rate of inflation.

Drugmakers have typically pushed through price hikes at the beginning of January and July. On Monday, for example, 20 companies raised the list prices of more than 40 drugs by an average of 13.1%, according to data from Rx Savings Solutions cites by The Wall Street Journal. A year earlier, 16 companies raised the list prices of dozens of drugs by an average 7.8%.

But the dynamics of drug pricing have changed somewhat, perhaps as the result of manufacturers growing wary of public and political scrutiny they face. “Many pharmaceutical companies have pledged to raise their drugs’ list prices by less than 10% each year,” the Journal’s Jared S. Hopkins writes. He adds that, over the first quarter of 2019, list prices for branded drugs in the United States increased 3.3%, compared with 6.3% a year earlier, according to SSR Health LLC pharmaceutical analysts. And over the past six months, the top 100 U.S. drug brands and 30 smaller brand-name medications saw prices increase by a more modest average of 3.1%, according to industry analysts cited by Politico.

Many large drugmakers skipped the July 1 round of price increases, and some products did see prices decrease.

At the same time, drug companies have begun to stagger their price increases to avoid drawing attention, RX Savings Solutions CEO Michael Rea told Politico.

The bottom line: "The data has something for everyone in it," one industry analyst told Politico. "That said, it’s hard to imagine what [drugmakers] are thinking. Keeping your head down would seem to be a much better strategy." But those pharmaceutical companies also face pressure from shareholders to grow their profits — and the prescription drug market is inelastic, as Rea told CBS. "It's a good that people need, in many cases in order to stay alive," he said. "You have a lot of flexibility to drive prices higher and higher." Some companies that didn’t raise prices Monday may still do so soon.

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