Is pharma hiking prices to recoup on reform?

Drug prices are going up--fast. That's the assessment of healthcare economists and other industry-watchers, who say that the rate of prescription price increases is higher than it's been for more than 15 years, the New York Times reports. Just over the past 12 months, wholesale prices of branded meds have mushroomed by about 9 percent, adding more than $10 billion to U.S. drug spending.

Drugmakers say they're raising prices so they can maintain the kind of profits they need to replenish their depleted pipelines. Some of the biggest drugs in pharma are going off patent, taking billions in sales with them. Pharma firms need new products to make up the difference, they say.

But industry critics theorize that drug companies are hiking prices in anticipation of the discounts they offered as part of the now-infamous $80 billion cost-cutting deal with the Senate and White House. Of course if prices are higher before the discounts go into effect, then the discounted prices are higher, too. And drugmakers are fighting provisions in the House version of healthcare legislation that would cut spending by an additional $60 billion over 10 years.

According to an analysis by Credit Suisse pharma-watcher Catherine Arnold, the eight biggest drugmakers have hiked prices on their best-selling meds by an average of 8.8 percent in the last 12 months. Arnold said impending cost-containment under healthcare reform "entered into the decisions of manufacturers to raise prices this year," the NYT reported. But Merck--whose price tags went up an average of 8.9 percent, with popular allergy/asthma med Singulair up more than 10 percent--took issue with that idea. "Price adjustments for our products have no connection to healthcare reform," a Merck spokesman said. Your thoughts?

- see the Times piece