Amid growing pressure by the Trump administration to reduce drug prices for U.S. patients, Merck has announced that the company will not increase the average net price across their product portfolio by more than inflation annually. They will also lower the cost of Zepatier, its hepatitis C treatment, by 60 percent, and several other products by 10 percent.
In the statement, Merck also pledges to continue evaluating their portfolio to look for opportunities to reduce costs for patients.
According to the company, some of the factors considered when choosing which products to reduce in price were the “gap between list price and actual discounted prices paid in the market, the contractual obligations under existing arrangements with payers, and the opportunity to broaden access to treatment.”
“This decision is a response to President Trump’s blueprint and reflects the industry’s understanding that the President is serious about bringing change to our drug markets,” U.S. Secretary of Health & Human Services (HHS) Alex Azar said in a statement that praises Merck’s decision. “Actions announced by HHS this week on over-the-counter drugs, biosimilars, and importation are helping to build a wholly new system that puts American patients first. More action is on the way.”
Merck’s announcement comes days after Novartis decided against raising U.S. prices on its prescriptions drugs, and Pfizer recently postponed planned price increases for nearly 100 drugs, a decision that came after a meeting with the president.
While the administration is quick to commend Merck’s decision and to file it away as a win for their initiative, Merck did not cut the prices of any of its big sellers, like the cancer treatment Keytruda or the diabetes drug Januvia. Instead, it reduce the price of Zepatier, a treatment whose sales have dropped so low that U.S. sales were offset by after-the-fact rebates to insurers. In a 65 percent decline from last year, Zepatier brought in $131 million in global sales in the first quarter of 2018. This drop in sales is most likely the result of fierce competition from other hepatitis C treatments, with Gilead’s treatment so effective, it’s even causing problems for Gilead.
By contrast, in the first quarter of 2018, Keytruda had sales in the U.S. of $838 million and Januvia brought in $465 million in the same period.