The beginning of a new year often prompts individuals to make significant changes in their health habits. This trend extends to drug companies as well.
According to health care research firm 3 Axis Advisors, more than 250 branded drugs from pharmaceutical giants like Bristol Myers Squibb, Sanofi-Pasteur, Merck, and Pfizer will experience price increases in the U.S. starting on Jan. 1.
Pfizer, one of the leading pharmaceutical companies, has decided to increase the prices of more than 60 drugs from its extensive portfolio. Among the drugs seeing a price hike, Pfizer’s COVID treatment, Paxlovid, will experience a 3% increase. Additionally, the company’s cancer drugs, Adcetris and Ibrance, along with the arthritis treatment Xeljanz, will now cost between 3% and 5% more. This move by Pfizer aims to adjust the pricing of these medications, as reported by Reuters.
The median increase in drug prices, which only considers the list price without factoring in rebates or discounts, remains consistent year over year at 4.5%. However, it is worth noting that more drugs are being assigned higher price tags in 2025 when compared to the previous year.
According to a statement provided to Fortune, Pfizer has made adjustments to the average list prices of their medicines and vaccines for 2025. These adjustments have been made below the overall rate of inflation, which is approximately 2.4%. The company explains that this modest increase is necessary to support investments that enable them to continue discovering and delivering new medicines, while also addressing increased costs within their business.
Higher prices on new drugs?
Prescription drug prices in the U.S. are considerably higher than in other wealthy countries.
According to a 2022 article published in JAMA, experts have noted that drug launch prices have continued to rise despite a previous backlash that led drugmakers to reduce annual increases. This ongoing upward trend in prices has led to payers restricting access, increasing premiums, and imposing unaffordable out-of-pocket costs for patients. In their analysis of drug launch price trends from 2008 to 2021, the researchers highlight the negative impact of these rising prices on healthcare affordability.
According to Reuters’ analysis, the prices of new drugs in the United States showed a notable increase of 35% in 2023 compared to the previous year, 2022. The analysis was carried out in February of 2024.
According to 3 Axis president Antonio Ciaccia, drug manufacturers are facing limited opportunities to raise prices over time. As a result, they are resorting to higher launch prices as their only viable option, especially in light of the increased penalties for year-over-year price increases. Ciaccia shared this insight with Reuters regarding the planned drug price hikes in 2025.
Drugmakers are expected to announce additional price increases this month.
