GAO: Some meds had 'extraordinary' price hikes over past eight years

A report from the Government Accountability Office (GAO) issued Monday finds that "[p]rices on a growing number of prescription medications have ballooned in recent years as consolidation in the drug industry leaves fewer companies manufacturing niche medications," The Associated Press reports. "Congressional investigators say the number of extraordinary price hikes on drugs doubled between 2000 and 2008. The drugs affected are mostly specialty medications but also include some popular products like Bayer's antibiotic Cipro and the Eli Lilly schizophrenia treatment Zyprexa." The report "attributed the rise to a combination of factors, including industry consolidation and price hikes by third-party providers who repackage drugs for patients. The GAO's findings could put new pressure on drugmakers to contribute billions more to the health-care reform effort being finalized by Congressional Democrats" (Perrone, 1/11).

The Wall Street Journal: "The report might also play into debate over a pathway for generic versions of biologics, which are complex medicines derived living cells as opposed to traditional chemicals. The GAO says patent and marketing exclusivity protections may block competitors from making a particular drug, meaning one company might be able to raise prices without fear of being under sold. 'We found that a lack of therapeutically equivalent drugs - generics and other brand-name drugs used to treat the same condition - and limited competition may contribute to extraordinary price increases, the report says. ... The GAO said it only looked at drugs that had a price increase of 100% or more. The report was requested by Sens. Charles Schumer (D., N.Y.) and Amy Klobuchar (D., Minn.) after a hearing in 2008 that investigated the rising costs of drugs used to treat rare diseases" (Favole, 1/11).

Reuters: "The influential industry group Pharmaceutical Research and Manufacturers of America (PhRMA) criticized the GAO report for focusing 'only on a small number of selected brand medicines rather than the entire prescription drug market.' The GAO itself noted that the number of products that saw increases -- as many as 416 products when different doses and formulations were factored in -- represent only about half of 1 percent of all brand-name drug products. It also said about half of the price hikes were seen with products that are repackaged in smaller amounts for use by hospitals or physicians" (Heavey, 1/11).

PharmaTimes (not related to PhRMA) notes that the price increases of 416 brand-name medicines mainly ranged "between 100%-499% ... Commenting on the findings in a letter to the Senators, GAO health care director John Dickson says that extraordinary price increases can lead to substantially higher spending for public and private insurance plans, hospitals and other providers, and may also contribute to overall drug spending, which has gone up about 10% a year since 2000. Moreover, patients 'may also face higher out-of-pocket costs and reduced access to medically-necessary and sometimes life-saving drugs,' he adds" (Taylor, 1/12).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.