Between 2000 and 2008, the prices for 321 different brand-name drugs soared between 100 percent and 499 percent, and the actual number of 'extraordinary' price hikes more than doubled each of those years, according to areport issued by the General Accountability Office. More than half were in just three therapeutic classes - central nervous system, anti-infective, and cardiovascular.
Most of the price hikes were for brand-name meds costing less than $25 per unit. Depending on the condition treated and length of treatment, the full cost could total several thousand dollars. A lack of therapeutically equivalent drugs, both generics and other brand-name drugs, may contribute to extraordinary price increases, according to the report. And the limited availability may be due to patent protection and market exclusivity, and the size of the market for a given drug.
Another reason cited - mergers, which reduce competition. For example, the rights to four case-study drugs, which weren't named, were obtained by a drugmaker, and two of these drugs had an extraordinary price increase shortly after the rights to the drugs were purchased, the GAO found.
The report emerges just as the House and Senate attempt to reconcile versions of health care reform, which has drawn criticism that a deal to win support from the pharmaceutical industry failed to force drugmakers to respond to rising costs (background here). Whether drugmakers will face added pressure to contribute more than the agreed-upon $80 million to fund the bill remains to be seen.
"Another way of viewing this is that an increasing number of companies are recognizing that they have been underpricing their drugs. Given the upward trend in prices of new drugs, re-pricing of older drugs should also be expected," writes Aidan Hollis, an economics professor at the University of Calgary, in an email. "The government should be asking -- what is the mechanism that we can rely on to control drug pricing in an environment with widespread insurance?"