Ariad Pharmaceuticals Inc fka ARIA

[jbog]

WSJ Article today. Ariad's not alone here.

http://www.wsj.com/articles/drugmakers-find-competition-doesnt-keep-a-lid-on-prices-1480248003

Pfizer Inc. raised the list price of Viagra by 13% in June. Less than a week later, Eli Lilly & Co. pushed up the price of its competing pill Cialis by the same percentage.

The two companies, though rivals, followed a common industry practice: raising prices almost in lockstep. For years, Pfizer and Lilly have taken increases on their erectile-dysfunction drugs within weeks of each other—sometimes even on the same day—keeping the list price of each pill within a few dollars.

The practice highlights what many see as a big problem in the drug industry: Even when there is competition, prices can continue to climb. That is because patients tend to stick with a drug that works for them, and health insurers and drug-benefit managers sometimes have contracts for drugs that prevent switching to cheaper options.


“You’re not rewarded for having a low price and for the most part, the market doesn’t punish a high price,” says Mick Kolassa, who has advised pharmaceutical makers and government health-care programs on pricing.


A common six-pill prescription of Viagra or Cialis lists for around $300 today—more than double the price five years ago, according to wholesale acquisition-cost data supplied by Connecture.
Pfizer and Lilly say the publicly disclosed list prices don’t indicate the true cost because the companies give insurers and employers confidential discounts. They also say they offer financial assistance to some patients who lack insurance or can’t afford their out-of-pocket costs.

Tandem drug-price increases for other ailments have prompted lawmakers to call for investigations into potential collusion. This month, Sen. Bernie Sanders (I., Vt) and Rep. Elijah Cummings (D., Md.) wrote the Justice Department and Federal Trade Commission requesting an investigation of whether insulin makers “have colluded or engaged in anticompetitive behavior” in setting prices.

“Not only have these pharmaceutical companies raised prices significantly—sometimes by double digits overnight—in many instances the prices have apparently increased in tandem,” the pair wrote. The FTC and Justice Department declined to comment.

Among the insulins singled out in the letter were Lantus from Sanofi SA and Levemir from Novo Nordisk A/S. Until Novo raised Levemir’s price last year, each of the drugs listed for $372.75 a month—about 2½ times their sticker price five years earlier—after a series of lockstep increases, according to Connecture. Lantus’s list price has held steady since November 2014; Levemir now retails for $403.50 a month.

Sanofi says it follows all laws, and that Lantus costs insurance plans less than it did five years ago after “aggressive” discounts. Novo says it sets prices independently and “competitively negotiates” discounts with insurers and drug-benefit managers.

Tandem increases can be perfectly legal, so long as companies don’t confer with each other, says Herbert Hovenkamp, a University of Iowa law professor who wrote a reference book on antitrust law.

Pfizer and Lilly said they act independently when raising prices. “We do not consult other pharmaceutical companies or other competitors on the price of medicines,” a Lilly spokesman said. Both companies said they consider many factors when setting prices, including the price of competing products and the value of their medicines.

In compliance training, companies tell employees not to discuss pricing with rivals. But when it comes to drugs, list prices are public.