Drugmakers hike prices to boost revenues

Here's an obvious example of how the healthcare system stymies even the best efforts at cost control. With the economy in recession, companies of all kinds--including healthcare and pharma firms--are looking for ways to cut costs and boost revenues. Of course. Meanwhile, governments and insurers are trying to rein in their healthcare costs. Naturally.

So, drugmakers are doing what most for-profit companies would do under the circumstances: They're raising prices wherever they can. And because drugs don't run up against price resistance like, say, off-the-rack suits or shoes or umbrellas might--because penny-pinching consumers aren't buying them directly--drugmakers have a bit more leeway when it comes to markups.

Thus, the price of combating erectile dysfunction with Viagra just leapt by at least 20 percent (thanks, Pfizer!). The Bristol-Myers Squibb leukemia med Sprycel saw its prices jump by almost 33 percent since the first quarter of 2008, too. And which cancer patient is going to stop taking Sprycel because of a price increase? Very few, we hope.

Indeed, the Wall Street Journal reports that prices for a dozen top-selling drugs increased by double-digit percentages year-over-year. Eli Lilly's ED treatment Cialis: Up 14.2 percent. Pfizer's kidney cancer treatment Sutent: up 14.3 percent. Lilly's ADHD remedy Strattera: Up 15.6 percent. Not good for the Obama administration's efforts to cut healthcare costs, is it? What's more, some analysts think drugmakers are raising prices to help cushion themselves against healthcare reform. "When the government is talking about more aggressive discounts, your start price is going to determine your end price," Catherine Arnold of Credit Suisse told the WSJ. "I don't think I have ever seen anything quite like this."

- read the WSJ article

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