Roche halts price hikes for 2018—but only after it already raised them twice

After two rounds of price hikes in January and July, Roche told the HHS on July 11 that it will not take any more price increases this year. (Roche)

Roche joined a growing list of Big Pharma companies calling a halt to drug price increases—or cutting them—after President Donald Trump's naming and shaming. But that was after the Swiss drugmaker had already put through two rounds of price hikes this year.

The Swiss pharma told the Department of Health and Human Services on July 11 that it will not take any more price increases this year, it said in a statement shared with FiercePharma. But Roche said company-by-company, voluntary halts isn't enough. Instead of relying on each pharma to abstain, the U.S. needs “long-term, systemwide solutions that lower costs, while sustaining scientific innovation and access to life-changing medicines.”

Roche’s pledge might have appeared more resounding if it hadn’t already jacked up prices twice this year, in January and July, the two months when pharma typically rolls out their price hikes. According to Bloomberg, those two rounds have been typical of Roche for several years. Meaning? The company wasn't likely to boost prices again this year anyway.

That makes Roche one of the only two large-cap biopharma companies that had pushed ahead with a second price increase this year, Goldman Sachs analyst Jami Rubin noted in a memo on July 11. The other one is Novo Nordisk. Pfizer backed off its second round of hikes, at least until Trump's pricing blueprint takes effect or year's end, whichever comes first.

To be fair, though, Roche’s net price increases have been comparatively modest, staying at around 3% over the past few years, according to the company. But those hikes did hit its best-selling blockbuster drugs, such as Herceptin, Rituxan, Avastin, Perjeta and Tecentriq.

In its statement, Roche also pointed to the fact that it has launched some new drugs at lower price points compared with other meds in their respective fields. Multiple sclerosis drug Ocrevus, for example, is priced 25% lower than Merck KGaA’s rival Rebif, which Ocrevus outperformed in phase 3 studies. Roche previously noted that MS drug prices have grown by 400% over 12 years, and said it wanted to “reverse this trend.”

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Roche’s announcement follows similar moves by Merck & Co. and Novartis in addition to Pfizer, and seemingly was taken to avoid confrontation with Trump, who has criticized drugmakers for putting up high drug prices and tweeted specifically about some, including Pfizer.

Drugmakers are lowering prices because they “do not want to be publicly shamed on Twitter,” Jefferies analyst Michael Yee recent told CNBC. Both Trump and drug companies therefore are “appearing to look good, at least on the surface,” he said.

Pfizer, the first to be slammed by Trump on Twitter, postponed—not completely abandoned—its July 1 price hikes on about 40 drugs, many by more than 9%. Wells Fargo analyst David Maris said at the time that Pfizer’s decision will have a chilling effect on other drugmakers considering price hikes.

Then followed Merck, which pledged a commitment to “responsible pricing” and to limiting its average net price increases within the inflation rate. It also took 60% off Zepatier’s sticker and 10% off the price of six other products, all of which were either off-patent or low-performing brands.

RELATED: Roche's Ocrevus is one of the best MS launches ever, but Tecentriq in I-O? Not so much

Analysts were not impressed. Evercore ISI analyst Umer Raffat noted that Zepatier has already lost to other hepatitis C drugs by Gilead and AbbVie, while other planned cuts “are all TINY” because sales of the six products accounted to less than 0.1% of Merck’s total 2017 sales.

On Novartis’ second-quarter earnings call, CEO Vas Narasimhan said his company had in June decided to suspend price hikes this year “given the dynamic environment” the industry’s facing. The thing is, it had also already jacked up prices for 75 drugs by 2.9% to 9.9% earlier in the year, including a 6.5% list price increase for psoriasis drug Cosentyx, Maris noted in January.

Roche, in its statement, echoed a similar tone from Novartis’ Narasimhan and said it’s working with HHS on ideas that can bring about lasting change. “These include enabling the Centers for Medicare & Medicaid Services to benefit more directly from private sector competition for Part B medicines; reforming the 340B program; and implementing novel pricing and reimbursement models,” said Roche.