Merck, Amgen adopt double-digit price hikes in test to Big Pharma's unofficial annual limits: analyst

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Merck raised the prices for its vaccine portfolio by 11% year over year, while Amgen hiked the cost of Otezla by 10%, according to Bernstein's data. (Amgen Inc)

For years, top pharma companies responded to pricing criticism by pledging to limit their increases. After Allergan CEO Brent Saunders proposed keeping annual price hikes under 10% amid sharp drug pricing scrutiny, many companies followed suit

But now it appears some big players are starting to test the limits of pharma’s social contract, Bernstein analyst Ronny Gal pointed out in a note to clients on Monday. 

For one, California-based Amgen recently raised the list price for its Celgene-acquired psoriasis med Otezla by 2.4% in August, bringing its total increase to 10% over the last year. For a big-selling immunology drug, the number is "far above the 5% trend the industry accepted" during former president Donald Trump's term, Gal wrote.

The drug has proven valuable for Amgen amid the pandemic given the convenience of an oral treatment over injectable rivals. Last year, the company raked in $2.2 billion for the med, which now costs about $3,857 for a month’s supply before discounts.

Meanwhile, Amgen also hiked the price on its oncology biosimilar Mvasi and chronic kidney disease med Parsabiv by 3% each, according to Bernstein’s data. Mvasi’s increase was noteworthy since biosimilar list prices don’t usually increase, Gal said, noting that it could be tied to hospital prices. 

For Amgen’s part, the company said the price increases across its entire U.S. portfolio “accurately reflects our continued clinical trial spend and key pricing indices.” Amgen expects a single-digit decline in the net price across all of its products this year because of negotiated rebates and discounts, a spokesperson said. 

RELATED: Has the Brent Saunders price-hike limit become a de facto pharma rule?

The Amgen increases came two weeks after Merck raised prices on a slew of its vaccines, sending prices up 11% year-over-year, Bernstein analysts found. Given that those price jumps didn’t make headlines, the analysts “wonder if pharma is now testing the market sensitivity for higher increase rates,” Gal wrote. 

Among shots included was Merck’s HPV vaccine Gardasil 9, which saw a 11% annual price hike, according to the Bernstein analysts. Gardasil 9, along with its sister shot Gardasil, were hit particularly hard during the pandemic as patients delayed doctors visits and prioritized COVID-19 jabs. 

However, those vaccines have started their comeback as sales jumped 88% during the second quarter to $1.23 billion.  

Merck also raised the price for its chickenpox virus shot Varivax; measles and mumps vaccine MMR II; and combo jab ProQuad by 11% each year over year, Bernstein said. A Merck representative was not available for comment.  

RELATED: Takeda, AbbVie, BMS, Sanofi, Lilly and others join growing tally of pharma's July price hikes: report

Pharma companies have faced years of pricing scrutiny and at times have responded by reining back their price hikes. Now, it appears the pressure from Washington, D.C., is set to ramp back up, with proposals ranging from Medicare negotiations to importation being floated in Congress.

In July, drugmakers raised the price on 67 brand name drugs by an average of 3.5%, according to GoodRx’s counting.