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Drug Industry Raises Prices by 9%

From UPI Top Stories (November 16, 2009)

U.S. drug manufacturers have been raising their prices at the fastest clip since 1992, industry analysts say.

Wholesale prices for brand name prescription drugs have increased by about 9 percent in the last year, even as the industry has agreed to support Obama administration healthcare reforms that would cut the nation's drug costs by $8 billion, The New York Times reported Monday.

Drug makers say they need to raise prices to plow money back into research and development to find new drugs, contending they need to replace popular drugs whose patents will soon expire. But critics say the manufacturers are trying to raise the price bar before Congress passes reform measures aimed at curbing future drug spending.

"When we have major legislation anticipated, we see a run-up in price increases," Stephen Schondelmeyer, a University of Minnesota pharmaceutical economics professor, told the newspaper.

Joseph Newhouse, a Harvard University health economist, told the Times a similar pattern of unusual price increases happened in 2006 just before Congress added drug benefits to Medicare, when prices shot up by their widest margin in the six previous years.

"Price adjustments for our products have no connection to healthcare reform," said Merck spokesman Ron Rogers.

Posted: November 2009