Single-digit price-hike pledge? J&J has that covered already, company report says

Johnson & Johnson realized average net price increases of 3.5% last year, according to a new "transparency report."

janssenJohnson & Johnson has joined fellow Big Pharma Merck & Co. in rolling out a “transparency report" to defend its own reputation in the face of growing scrutiny of the industry’s pricing ways.

All told, the world’s top pharma player increased its drug prices an average of 8.5% last year. But after a total of $11 billion in rebates and discounts, J&J says, its share of those price hikes averaged 3.5%.

J&J's net-price-hike argument comes as the U.S. drug pricing spotlight widens to pharmacy benefit managers and others in the drug supply chain. Those groups, the pharma industry contends, play a big role in rising costs; an industry-sponsored report found that rebates and discounts ballooned to $106 billion in 2015 from $67 billion in 2013.


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RELATED: Behind-the-scenes rebates take a growing bite out of pharma sales, industry-funded study says

PBMs don't plan to take that blame sitting down, though. The industry's lobby group has been engaging with "key officials all over Washington" on proposals that would gut pharma profits.

For the last several years, J&J’s average net price increase has fluctuated between 2.5% and 5.2%, according to the report. Addressing a popular point for critics of the industry, J&J said it spent $7 billion on R&D last year, far outpacing marketing and sales expenses of $4.5 billion.

When pricing a new medicine, J&J's pharma unit, Janssen, considers value to the patient and society, the importance for access, future R&D costs and negotiations with private and public insurers, according to the company.

In a video accompanying the report, Jennifer Taubert, Janssen chairman for the Americas, said the company hopes it “will lead to more discussion about how we can work together to move toward a more value-based healthcare system” as well as address patient questions. The document also outlines commitments to clinical data transparency, access and investments.

J&J’s publication comes on the heels of a similar move by pharma peer Merck & Co., which said it raised prices an average of 9.6% in 2016. After rebates and discounts, Merck realized a 5.5% average net price increase for the year, according to that company’s transparency report.

RELATED: Merck & Co. 'transparency report' shows average percentage price hikes have mostly been in single digits

For large drugmakers, showcasing average hikes in the single digits serves as a way to counter the endless headlines of staggering price increases from the last year and a half. Pharma advocates argue it’s “bad actors” taking those triple- and even quadruple-digit hikes.

RELATED: Can pharma fix its bad rep without directly addressing price hikes? It's going to spend millions trying

Despite that argument, the newest drug pricing black sheep, Marathon Pharma, is a member of the industry’s lobby group, PhRMA. The group recently said it’s reconsidering Marathon’s membership.

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