Outrageous drug price increases by pharmaceutical companies may seem like exceptions – but they're more common than you think.
While only a few make the news, drug price hikes have become standard practice in the pharmaceutical industry.
Last year DRX, a unit of Connecture Inc. (Nasdaq: CNXR), studied one-year drug price changes on 3,000 brand-name drugs. The study found 60 had drug price increases that were double the year before.
For 20 of the drugs, prices more than quadrupled…
In a separate study, DRX also looked at 21,000 generic drug price changes. More than 3,500 had prices that had doubled or more since 2007.
The widespread drug price increases are putting pressure on hospitals as well as individual patients. Many of the drugs are lifesaving.
But it's the truly mammoth drug price hikes that have drawn the most attention…
Drug Price Hikes So Bad Congress Got Involved
The Daraprim episode last year may have been the most notorious drug price increase ever.
Daraprim has been around for 63 years and is used to treat a life-threatening parasitic infection as well as AIDS and cancer. Martin Shkreli, the CEO of Turing Pharmaceuticals, acquired the drug from Impax Laboratories (Nasdaq: IPXL) in 2015 and immediately raised the price per pill from $13.50 to $750 – an increase of 5,455%.
The shock of that drug price increase resulted in Shkreli getting called to testify before the Committee on Oversight and Government Reform in February. Blasted by both Republicans and Democrats, Shkreli simply smirked and invoked his Fifth Amendment rights.
The "Pharma Bro" came to personify outrageous drug price increases, earning the label "most hated man in America" – at least for a while. Under pressure he cut the price of Daraprim by 50%, but only to hospitals.
What many don't realize is that in 2009, years before Shkreli got his paws on Daraprim, it cost just $1 a pill. Another pharmaceutical company, CorePharma, bought the rights to the drug from GlaxoSmithKline Plc. (NYSE: GSK) in 2010 and promptly raised the price to $13.50 – an increase of 1,250%.
More recently, Mylan NV's (Nasdaq: MYL) decision to jack up the price of its EpiPens 548% drew fire. The cost rose from $93.88 in 2007 to $608 this year for two of the emergency allergy treatment injectors.
In August, Mylan CEO Heather Bresch, like Shkreli, was called before the House Committee on Oversight and Government Reform. She, too, was scolded. Unlike Shkreli, however, Bresch defended her drug price hike.
One reason lawmakers were upset is that Mylan sells the EpiPen for much less in other countries. For example, the same two-pack costs $182 in Canada and just $69 in the UK.
The EpiPen generated $1 billion in profits for Mylan in 2015, about 20% of the company's total earnings.
But other huge drug increases that haven't gotten much attention are no less outrageous. In some ways, these three drug price hikes are even worse than what happened with EpiPen and Daraprim…