If you need one of a number of drugs treating ailments ranging from heart arrhythmia to severe pain, you may be feeling another type of discomfort this year: a hit to the wallet.
Drugmakers including Pfizer (PFE) and Allergan (AGN) have boosted prices on many brand-name medications since last month. The price hikes, ranging from 1.3 percent to 42.3 percent, reflect the list prices, which don't represent the discounts and rebates negotiated by insurers and health care providers.
Since Jan. 1, Pfizer has boosted the list prices of dozens of drugs, with the average increase set at 10.6 percent, according to a new report from Deutsche Bank. Even though it's common practice for drugmakers to lift prices at the start of each year, the pharmaceutical industry is increasingly under the spotlight for what some lawmakers and patients allege amounts to price gouging.
While legal, the hikes certainly aren't good news for consumers and their insurers, given that they come on the heels of sharp price increases in 2015. Americans paid almost 15 percent more for branded drugs last year, while prices on specialty drugs rose 9.7 percent, according to a new report from pharmaceutical drug analysis company Truveris. Generics weren't exempt from price inflation either, thanks to a price increase of 4.9 percent last year.
"Even as pressures mount, the trend of rising costs shows no signs of stopping," Truveris co-founder AJ Loiacono said in a statement.
Pfizer said it didn't dispute the numbers in the Deutsche Bank report, but in a statement it stressed that the price increases fail to reflect "the considerable discounts offered to the government, managed care organizations, and commercial health plans and certain programs that restrict any increases above the inflation rate."
To be sure, many drug prices remain the same in 2016. Merck (MRK), for instance, held the line on its brand-name medications, including the allergy medication Clarinex and the diabetes drug Januvia. However, in 2015 those two medications saw price increases of 8.9 and 20.8, respectively.
Repeated annual price hikes mean any prior discounts may be eroded. And the increases are also at a much faster rate than inflation or wages, which can also lead to pain for customers' budgets.
In one case, Vanda Pharmaceuticals boosted its new drug Hetlioz by 10 percent on Jan. 1, increasing its cost to $148,000 annually, according to The Wall Street Journal. A company spokeswoman told the publication that the price was within the range of drugs that treat similar small groups. Hetlioz is used by fewer than 1,000 patients.
The issue came to the forefront last year when 32-year-old pharmaceutical CEO Martin Shkreli bought a six-decade-old drug called Daraprim and raised the price of one pill from $13.50 to $750. His reasoning? The new profits from the old drug would help his company develop a new drug, Shkreli told CBS News.
Shkreli isn't alone in arguing that higher prices are needed to offset the investment into development of new drugs, but the hikes can appear baffling to consumers. After all, in many cases there's nothing new or different about the medication -- the only thing that's changing is its price.
The sharpest price increase from Pfizer is a 42.3 percent boost for a drug called Quelicin, an intravenous drug used for inducing general anesthesia or inserting tubes into a trachea, according to WebMD. Well-known drugs also saw price increases, such as Endo International's (ENDP) pain-killer Percocet, whose price rose by 25 percent in January. That comes after increases of 25 percent and 30 percent during the past two years, respectively, according to Deutsche Bank.
In a statement, Endo said it "believes its pricing strategy is rational and appropriate and price increases are not the primary driver of our corporate growth." It added, "In fact, for Endo's full portfolio of branded pharmaceutical products, the effective annual price increase is only about 5% and for Endo's generics product portfolio, we also only assume only a low single digit annual price increase."
Pfizer said that it has expanded its patient assistance program to include patients who earn four times the federal poverty level, or $97,000 for a family of four.
"Medicines are among the most effective and efficient use of private and public health care dollars," the company said. "We believe all patients should have access to the medicines their doctors prescribe."