Merck Releases Average Drug Price Increase Data

American drug manufacturer Merck has released price increase data for U.S. sales going back to 2010. However, the data lists average increases but not individual dollar increases for specific drugs.

The disclosures consist of the yearly average list price change and net average price change, which factors in discounts and rebates. Merck’s price increases averaged 9.37% over the six year period with data provided, ranging from an average increase of 7.4 percent in 2010 to 10.5 percent in 2014. In 2016, the average price increased 9.6 percent or 5.5 percent net of discounts.

Merck also included information on annual average discounts, which has rapidly increased from 27.3 percent in 2010 to 40.9 percent last year. As part of the disclosure, Merck stated that this rise in discounts reflects increased competitiveness in branded drug markets as well as mandatory discounts, due to the Affordable Care Act. Downward pressure on price due to competition has had more of an impact on certain markets. In a statement to The Wall Street Journal, Merck’s CEO Robert McMahon stated that in more competitive markets such as diabetes care, the firm offered higher rebates to pharmacies in order to remain on employers’ and health insurers’ preferred drug lists.

While Merck has not shared its justification for annual price changes nor has it divulged drug-specific price increases, this strategy intends to improve the transparency of its pricing system and assuage fears of rapidly escalating pharmaceutical costs. Other companies plan on following suit; Johnson & Johnson plans on releasing its own average price information in February, while Allergan has announced it will cap average annual price increases at 10 percent. Merck promised to release price increase data every January from this point forward.

For more information, read The Wall Street Journal‘s article or click here to view Merck & Co.’s transparency disclosures.

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