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Merck becomes latest to offer insight into drug pricing practices

January 30, 2017 By Sarah Faulkner

Merck becomes latest to offer insight into drug pricing practicesLast week, Merck (NYSE:MRK) released figures about its U.S. pricing practices, joining a growing list of companies that are revealing their pricing strategies amid criticism of the industry’s price hikes.

The company didn’t release price increases of specific products, citing competition concerns. Merck said it would update the list annually at the beginning of each calendar year.

“Because price increases have become such an important issue, we felt we needed to provide greater transparency into list and net prices,” president of Merck’s U.S. market, Robert McMahon, reportedly said. “The price increases we take are reasonable.”

The company’s average list-price increase across it’s brand-name drugs ranged peaked at 10.5% in 2014. The average increase in its net prices, taking into account the discounts that Merck gives to insurers, hit its highest mark in 2012 at 6.2%. In 2016, Merck raised list prices by 9.6%, on average, with an average net price increase of 5.5%.

The company also said that the average discount for its products climbed from 27.3% in 2010 to nearly 41% last year.

Merck’s pricey cancer drug Keytruda rings in at about $12,500 a month per patient, according to the Wall Street Journal, but McMahon said the price was justified according to the drug’s proven results for patients with certain cancers.

Earlier this month, Johnson & Johnson (NYSE:JNJ) said that it expects to issue a report that will detail how much it has raised the list prices for its prescription drugs. The report will describe average increases in list prices and the average prices after discounts.

The move comes after some pharmaceutical companies, including Allergan (NYSE:AGN) and Novo Nordisk (NYSE:NVO), have pledged to keep their annual price increases to single-digit percentages. When Allergan published its “social contract” in September, CEO Brent Saunders challenged other companies to limit price increases “before we all face the impact of government regulation that stifles innovation and patient care.”

Drug pricing has been at the forefront of public discussion regarding healthcare. The industry’s pricing problems were highlighted in 2015 when Turing Pharmaceuticals raised the price of its malaria drug Daraprim from $13.50 to $750 a pill. This year, Mylan (NSDQ:MYL) has been the poster-child for industry greed for many politicians, after reports showed that the company raised the price of its EpiPen device 500% since it acquired the product in 2007.

Filed Under: Featured, Pharmaceuticals, Policy, Wall Street Beat Tagged With: Allergan, johnsonandjohnson, Merck, Novo Nordisk

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