Financial Times - Global pharma sales forecasts cut amid pricing pressures
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June 20, 2017. David Crow, Barney Jopson.
EvaluatePharma lowers projections for next 5 years by $390bn.
Global sales projections for the pharmaceuticals industry have been cut by a closely watched forecaster amid signs rampant drug price inflation in the US is starting to ease after years of public pressure.
EvaluatePharma on Tuesday said it was the first time in a decade that it had cut its global revenue forecast for drugmakers, as it removed about $390bn of sales from its model for the period between 2017 and 2022.
“The continued political and public scrutiny over pricing of both the industry’s new and old drugs is not going to go away and we are starting to feel the impact now,” said Antonio Iervolino, head of forecasting at Evaluate.
Drugmakers have found it increasingly difficult to convince health insurers and the US government to pay premium prices for their products, as evidenced by the lacklustre sales of novel heart medicines such as Amgen’s Repatha, Sanofi’s Praluent and Novartis’s Entresto.
Some pharmaceutical groups, including AbbVie, Allergan, Novo Nordisk and Sanofihave pledged to limit annual price increases in response to public pressure over the soaring cost of medicines.
However, the response has not been uniform: this month Pfizer raised the list price of more than 90 medicines, taking the typical annual increase to 20 per cent.
Mr Iervolino said the rising cost of discovering and bringing a new drug to market — which now runs to about $4bn over 10 years — would put “additional pressure on the productivity of the industry and its longer-term sustainability”.
The report is the latest sign that drug price inflation is abating after years of public pressure that escalated in 2014 following the case of Martin Shkreli, whose company bought a decades-old medicine for cancer and Aids patients and then promptly raised the price from $13.50 to $750 a pill.
Janet Yellen, chair of the Federal Reserve, last week singled out drug prices as one of the factors in a series of weaker inflation readings for the US, while a recent report from SSR, the research group, suggested that prices fell in the first quarter when taking discounts and rebates into account.
The list price of branded prescription drugs increased 6.5 per cent in the first quarter of the year, according to SSR, compared with 10.9 per cent in the same period of 2016. Net prices after discounts fell 1.2 per cent versus inflation of 4.1 per cent in the first quarter of last year.
However, many patients will feel as though the cost of medicines is still rising, because the amount they must personally pay “out of pocket” is linked to the list price of drugs and does not factor in discounts.
The forecast comes as Washington sharpens its focus on drug prices amid fierce debate among Republicans, who control the levers of power, over how to reform the US healthcare system.
Many in the industry are expecting President Donald Trump to issue an executive order on drug prices in the near future following a White House meeting of administration officials to discuss the issue.
The White House said: “Last Friday, a meeting took place as part of the ongoing discussions to reduce the burden of the high cost of drug prescriptions and unleash a wave of innovation to develop cures and treatments for patients.”
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