Pharmaceutical prices have been rising year over year. What’s behind the consistent climb in prices? “A number of events have converged to cause high drug-price increases,” says Len Gray, division vice president of health system clinical services, Comprehensive Pharmacy Services.
One factor was the consolidation of generic drug manufacturers, which led to hyperinflation of low-cost generics. Another was a bubble of innovative drugs entering the market. The Food and Drug Administration approved 41 new drugs in 2014 and 45 in 2015. This is about twice as many as the 21 drugs approved in 2010. Among these new innovative drugs are so-called specialty drugs, like Sovaldi, that tend to be high in cost.
Pharmaceutical manufacturers also have been reformulating older brand-name drugs and increasing the price. Prior to patents expiring, the companies incrementally improve drugs by, for example, turning a twice-daily pill into a more convenient once-daily treatment. Alternatively, the manufacturers might identify new treatment uses for a drug.
What can hospitals expect in the future? “I think the outrageous price hikes are leveling off, and drug companies are going to be more guarded in how they increase prices,” says Marvin Finnefrock, division president of clinical and purchasing, Comprehensive Pharmacy Services. “But, we still need to be careful. Instead of a one-time 500 percent increase on a generic drug, you might see multiple small increases over the year.”