Vaccine maker got $1 billion from taxpayers. Now it’s boosting drug prices
One of the world’s largest drug companies has been aggressively raising prices even as it received hundreds of millions of dollars of U.S. government aid to develop a COVID-19 vaccine.
AstraZeneca, which the Trump administration has lauded for its vaccine work, boosted prices despite renewed promises by President Trump this summer to keep drug costs in check.
The multinational pharmaceutical firm raised prices in a way that stood out even among other big drug companies. It announced not just one set of price hikes in 2020 but two, often on the same drugs, according to an analysis of drug pricing data by The Times and 46brooklyn Research, a nonprofit that studies the pharmaceutical industry.
AstraZeneca hiked prices on some of its biggest-selling medicines by as much as 6% this year at a time when the overall inflation rate is hovering around 1%, the analysis shows. The administration has said nothing about the price increases.
AstraZeneca’s second round of increases came after it secured a $1.2-billion commitment in May from the U.S. for vaccine development and as the company was reporting more than $3.6 billion in operating profit in the first half of 2020.
“They clearly made a decision to do their pricing differently, both from their recent past and from their peers, at the same time they were seeking billions of dollars,” 46brooklyn founder Eric Pachman said.
AstraZeneca, which is based in Britain but also has a large U.S. operation, declined to discuss its pricing practices, instead offering a statement noting the company’s assistance programs for people unable to afford its drugs. “We recognize the challenges many Americans are facing and remain committed to ensuring patients are able to access our medicines,” the statement said.
The company’s price hikes underscored the persistent inability of American policymakers, including Trump, to rein in drug prices, even during a public health crisis when pharmaceutical companies are getting substantial public assistance.
“Pharma corporations are sophisticated political actors that understand this is a risky time to be seen increasing prices, and yet these corporations are addicted to price increases,” said Peter Maybarduk, who oversees drug policy for the nonprofit watchdog group Public Citizen.
Although the federal government has committed more than $10 billion this year to drug companies to develop a COVID-19 vaccine, the administration hasn’t required any commitments from drugmakers on the price they would charge.
Thus far, companies receiving government aid have only made vague promises to make any vaccines they develop affordable.
AstraZeneca has said it wouldn’t profit from vaccine sales during the pandemic, but it remains unclear how this would be verified and whether the company might raise prices after the worst of the crisis passes.
Drugmakers for years have pledged to make their products more affordable, assuring U.S. lawmakers, patient groups and others that they are sensitive to the struggles many Americans have paying for their medications.
Yet patients in the U.S. are finding it increasingly difficult to afford prescriptions, with 1 in 5 households reporting last year that they were unable to pay for a medicine that a doctor had prescribed in the previous year because of costs.
Nevertheless, to start this year, most major pharmaceutical companies continued to hike prices at rates far exceeding inflation, The Times and 46brooklyn found.
Several of the world’s biggest drugmakers announced hikes of 5%, 6%, even 9% on a host of popular medicines, according to the analysis, which looked at list prices by the 15 largest drug companies using the Elsevier Gold Standard Drug Database, which includes pricing and clinical information on tens of thousands of medications.
List prices are typically higher than the final prices health insurers and governments negotiate with drugmakers. But the list price guides negotiations and can have a major effect on what patients pay, especially as high-deductible plans increasingly require people to pay the list price until the deductible is met.
Moreover, in Medicare’s Part D, the nation’s largest prescription drug program, patients’ out-of-pocket costs for drugs typically rise when the list prices for drugs go up.
Other wealthy countries in Europe, East Asia and elsewhere more aggressively control the cost of medications, either directly through government price-setting or indirectly through tightly regulated price negotiations. That has protected patients in these countries from the cost burdens that now routinely overwhelm Americans, studies show.
At the start of the year, AstraZeneca’s 2020 price hikes initially looked relatively modest.
The company announced only 13 price increases in January, averaging 2.7% and none more than 3%, a threshold that is historically in line with inflation and typically attracts minimal attention.
Those hikes suggested that the company would be implementing among the least aggressive pricing strategies in the industry.
Only Swiss drugmaker Roche raised its prices by a lower average, according to the Times-46brooklyn analysis.
By contrast, AbbVie, an American manufacturer, increased prices on many of its drugs by more than 7%, including a 7.4% hike for its popular Humira medication. That followed a 6.2% increase on Humira in 2019.
Shortly after AstraZeneca’s January price increases, as the COVID-19 pandemic quickly spread across the globe, the company began talks with Oxford University to produce a vaccine initially developed by researchers at the British school. A formal agreement was signed at the end of April.
By mid-May, the drug giant had secured $1.2 billion from the U.S. Department of Health and Human Services. The department heralded the grant as paving the way for a major clinical trial in the U.S. and the production of what the Trump administration said would be more than 300 million doses of a vaccine.
Health and Human Services Secretary Alex Azar, a former executive at U.S. drugmaker Eli Lilly, called the award “a major milestone.” AstraZeneca last week put its clinical trials on hold after a participant developed a potentially serious complication.
The company received money from other governments over the summer as well. European nations — through the European Inclusive Vaccines Alliance and the European Union — put forward more than $1 billion. AstraZeneca signed deals with Japan, China, Brazil and other nations too.
At the same time, the company reported that its revenue for the first half of the year had increased 14%. Operating profit surged more than 20% from the first six months of 2019, according to the company’s earnings report.
Pascal Soriot, the company’s chief executive, at the time hailed the “strong performance” as “another step forward in profitability and cash generation.”
Nevertheless, AstraZeneca raised its prices again, announcing hikes in July on 10 more drugs. Unlike in January, the increases weren’t so modest.
The company pushed up the price on two drugs by 5%, including its popular Pulmicort, a steroid used to treat Crohn’s disease that the company reported generated nearly $1.5 billion in sales in 2019.
AstraZeneca also boosted prices by 6% on Nexium and Crestor, two old blockbusters that now have generic competitors but together still generate more than $300 million in U.S. sales, and much more globally. The two drugs are nearly 20 years old.
The company also raised prices on some of its most expensive drugs after holding off increases in January. Those included Tagrisso, one of the company’s big-selling cancer drugs, which costs more than $15,000 for a monthly supply. AstraZeneca increased Tagrisso’s price tag by 2% in July.
In addition to these increases, AstraZeneca raised prices a second time on 11 of the 13 drugs it had already bumped up in January.
That pushed the total 2020 price increases for most of these drugs to 5% or 6% as well.
No other major drug company made as many double price increases in 2020, the Times-46brooklyn analysis shows.
GlaxoSmithKline, another British pharmaceutical firm, raised prices twice on four drugs, the second most among the 15 major drug companies. Eight such companies didn’t implement a single double increase in 2020.
“AstraZeneca is the real outlier in 2020,” Pachman said.
In one nationwide survey earlier this year, 9 in 10 Americans said they were concerned that the pharmaceutical industry would take advantage of the current pandemic to increase prices.
Sensitive to voters’ concerns, Trump this summer said he would undertake new efforts to control prices, a promise he had made a centerpiece of his 2016 presidential campaign.
To date, none of the administration’s major proposals to restrict prices have been fully implemented.
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