Surprise, surprise. Reuters reports that Pharma is ushering the new year with new and higher drug prices. The true surprise would be if prescription drug prices did not continue to rise. Republicans in the Senate are not prepared to step in and enact Speaker Pelosi’s drug bill, which has passed in the House, or any other legislation to lower drug prices.
Congress effectively has given pharmaceutical companies monopoly power over prescription drug prices. Patents on prescription drugs protect them from competition for at least a decade and often longer. And, pharmaceutical companies often have considerable control over the availability and price of drugs in the generic drug market.
Consequently, on January 1, several big drugmakers, including Bristol-Myers Squibb, Gilead Sciences and Biogen, raised prices on scores of drugs. Pfizer, GlaxoSmithKline and Sanofi are also planning to raise prices on scores of drugs. Brystol-Myers says it will raise its drug prices as much as six percent this year.
Prices for most of these prescription drugs are going up about five percent, more than inflation. And, the drug price increases do not reflect any significant change in the cost of producing these drugs, which tend to cost pennies to produce. Still, you should expect to see more increases throughout the course of 2020.
Every country other than the US regulates drug prices. They recognize that competition does not work for pharmaceuticals. Rather, the incentives of insurers and drug middlemen, pharmacy benefit managers, are generally aligned with drugmakers. They profit more when drug prices are high.
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