The average price of branded prescription drugs in the US has doubled in the past five years, according to the country’s largest pharmacy group, a finding that threatens to fuel the political backlash against high prices.
Express Scripts, a “pharmacy benefits manager” that negotiates with drugmakers on behalf of US health insurers and employers, said the average wholesale price of branded medicines, which are protected by patents, rose 16 per cent last year and was up a total of 98 per cent since 2011.
Earlier this month, Mrs Clinton released a campaign advert targeting Valeant, the Canadian drugmaker that has gained a reputation for sharp price hikes. “I’m going after them,” she says in the advertisement. “This is predatory pricing and we’re going to make sure it is stopped.”The figures help illustrate why high drug costs have become a persistent theme in the US election campaign, with both the Democratic and Republican frontrunners, Hillary Clinton and Donald Trump, pledging to crack down on elevated prices.
Mrs Clinton has been more specific in her attacks on pharmaceuticals groups than she has on Wall Street, using her stump speeches to criticise Pfizer’s decision to quit the US to save taxes and pledging to close a loophole that allows drugmakers to deduct advertising costs from their tax bills.
On the campaign trail she often mentions Martin Shkreli, who became a pariah after increasing the price of a life-saving Aids and cancer drug from $13.50 to $750 per pill. She also relates the stories of people she has met who have reported a surge in the amount they pay out of their own pocket towards for their medication.
Mr Trump meanwhile has deviated from Republican orthodoxy on drug prices by saying that Medicare, the government-funded health programme for retirees, should be allowed to negotiate drug prices. He says that doing so would save the government $300bn a year, although that number is fiercely contested.
Patients should be able to import their medication from countries where it is sold at a lower cost, according to Mr Trump, who recently published a healthcare reform proposal that said drug companies provided a “public service”.
“The ‘public service’ phrase, should, in my opinion, chill anyone in the industry or those investing in it,” said Terry Haines, an analyst at Evercore ISI. “[It] is a rationale for comprehensively regulating an industry in the public interest.”
“Drug manufacturers have become a punching bag on the right,” said John Rother, president of the National Coalition on Healthcare, which campaigns for lower prices. “The politicisation of drug prices come as costs have surged after years of relatively small increases.”
Fears that the candidates will follow through on their promises with a crackdown on drug prices have contributed to sharp sell-off in pharmaceuticals and biotech stocks in recent months.
The Nasdaq biotech index has lost roughly a third of its value since September, when Mrs Clinton pledged to crack down on price “gouging” in a tweet.
Express Scripts blamed the soaring cost of medicines on a class of drug that is loosely known as “specialty medications” — high-priced drugs that treat complex conditions such as rheumatoid arthritis and cancer.
Spending on these specialty medicines — which include Humira, an injection for arthritis made by AbbVie, and Harvoni, a hepatitis C pill from Gilead — rose 17.8 per cent last year, according to the report. The class now accounts for 37 per cent of all drug spending, a figure that is set to rise to roughly half by 2018.
Conversely, the average price of generic medicines — copycat versions of drugs that have lost patent protection — fell roughly 20 per cent last year, according to Express Scripts.