Amgen hikes prices by single digits, with Enbrel matching AbbVie's Humira boost

Amgen increased the price of its Enbrel by 8.4% on Friday.

Tough talk and a swell of political scrutiny hasn’t stopped leading companies in biopharma from hiking prices on the world’s top drugs. In fact, as the inauguration proceeded in Washington, D.C., on Friday, Amgen raised the price of its top-selling med, Enbrel, an 8.4% hike that followed a larger one just six months ago.

It also came on the heels of an identical price hike for one of Enbrel's key competitors, AbbVie's Humira. Amgen executives say payer discounts will eat up most if not all of its latest hikes.

Bernstein analyst Ronny Gal wrote on Monday that he suspects Amgen timed its price increase “around the inauguration, where attention is elsewhere.” Amgen said it doesn’t expect to see a net gain after negotiations with payers, Gal added, but “with that magnitude, we wonder if 1%-2% of net value will not 'sneak in.’”

The Friday move follows a 28% increase for the anti-TNF blockbuster in 2015 and another boost of 9.9% in July 2016. During Amgen's third-quarter 2016 conference call, commercial operations head Anthony Hooper said the company expects "relatively little benefit" on Amgen price changes in 2017 due to competitive payer negotiations.

That could prove a problem, as the company has generated more than 80% of its operating income growth for the past six quarters from Enbrel price increases, according to a previous research note by Gal.

Aside from Enbrel, Amgen increased the stickers for several drugs in the low single digits this month, according to Gal's Monday note.

The hikes are just the latest in a series, as companies including Allergan and AbbVie have taken increases since the start of the year. Following up on its “social contract” pledge to keep price hikes under 10%, Allergan raised the prices of several drugs by single digits earlier this month—several of them at 9.9%. AbbVie CEO Richard Gonzalez committed to once-a-year single-digit hikes at the J.P. Morgan Healthcare Conference in San Francisco earlier this month. Days later, AbbVie boosted its Humira price by 8.4%.

While companies such as Mylan and Valeant saw a great deal of pricing scrutiny in 2016, Wells Fargo analyst David Maris wrote on Monday that things might change this year. After a round of meetings in Washington last week, Maris said lawmakers “would like to explore this as not just an outlier issue, but look broadly at large pharma and generic drug company pricing practices,” he wrote.

Of course, the industry plans to defend itself. Trade group PhRMA announced a new campaign on Monday with spending in the “tens of millions” annually to boost its reputation through consumer advertising and other efforts.

Part of the industry’s work includes discussion on the complex pharmaceutical supply chain, which drugmakers argue has played a role in pushing prices upward. A PhRMA-sponsored study unveiled last week found that rebates and discounts have grown in recent years. In total, branded drugmakers retained less than half of the United States’ total drug spend in 2015.

To that point, Raymond James analysts wrote in a note about Amgen’s hike that the “stage is set” for more “cross-industry finger-pointing” as the issue persists.

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