Merck Reveals Details on U.S. Drug-Pricing Practices

01/27/17 07:14 AM EST
By Peter Loftus 

Merck & Co. is the latest drug company to offer more detail about its U.S. pricing practices amid widespread criticism of the pharmaceutical industry's price increases in recent years.

The company is slated to release figures on its website Friday showing the average list-price increase across Merck's brand-name drugs and vaccines ranged from 7.4% in 2010 to a peak of 10.5% in 2014. The average increase in its net prices, which reflects the discounts the company gives insurers, ranged from 3.4% in 2010 to a peak of 6.2% in 2012, the company said.

Last year, Merck raised list prices by an average of 9.6%, with an average net price increase of 5.5%.

Merck isn't releasing its product-by-product price increases. Robert McMahon, president of Merck's U.S. market, said in an interview there are competitive issues with releasing product-specific information.

The number of products in Merck's brand portfolio since 2010 has ranged from 44 to 72.

Merck plans to update the figures each January in future years.

"Because price increases have become such an important issue, we felt we needed to provide greater transparency into list and net prices," Mr. McMahon said. "The price increases we take are reasonable."

Merck has introduced some new products with relatively high starting price tags in recent years. The company began selling the cancer drug Keytruda in 2014 for about $12,500 a month for the average patient. Mr. McMahon said the price was justified by the improved average survival benefit the drug provides for patients with certain cancers.

Merck also disclosed that the average discount from list prices for its products rose to 40.9% in 2016 from 27.3% in 2010. Mr. McMahon said in certain competitive markets, such as diabetes drugs, Merck has offered higher rebates and discounts to pharmacy-benefit managers so that they would keep Merck products on preferred-drug lists that employers and health insurers use to determine whether and how much they would pay for a drug.

Merck joins several other drugmakers that have taken steps in recent months to address criticism by politicians and patients of rising U.S. drug costs, as well as calls for more transparency in pricing. President Donald Trump has taken aim at the industry's pricing practices and pledged to change how the U.S. purchases drugs.

Johnson & Johnson has said it would release details about its average drug price increases in February, while Allergan PLC has said it would cap its annual U.S. list-price increases at less than 10%.

Write to Peter Loftus at peter.loftus@wsj.com

 

(END) Dow Jones Newswires

January 27, 2017 07:14 ET (12:14 GMT)

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