Merck & Co., Inc.(NYSE:MRK) is one of the pharma industry titans that are currently on the receiving end as a result of exaggerated drug price hikes. The drug maker has revealed a “Transparency and Disclosures” page showcasing the list prices of brand name drugs and vaccines. The price increases have triggered sharp criticism towards pharmaceutical companies, a routine that many allege has become common. The question is; how many patients can afford the prices? How significant will this transparency effort be?
Pharmaceutical companies’ defense over price increase
The drug price issue has apparently been a thorn in the side for the last couple of years. From the look of things, it seems like it is not coming to an end anytime soon. The pharmaceuticals have come out in defense of sharp criticisms of their actions.
In an interview, president of Merck’s U.S. market, Robert McMahon stated, “Because price increases have become such an important issue, we felt we needed to provide greater transparency into a list and net prices. The price increases we take are reasonable.”
In 2016, Merck raised prices by an average of 9.6%. However, the company argues that its price increases were bound to the single digits. The drug maker further submitted that it has been taking a close look at its pricing practices and is convinced that it is on the right path. In an accompanying post on the company’s website, president of global human health at Merck, Adam Schechter was quick to state that its portfolio has had a low to mid-single digit rate of increase.
What next for a majority of drugmakers with all the criticism?
Merck says its plan is to have updated information on pricing every year in January. This is likely to give a signal of expected changes. Others are using the tactic of relying on single-digit list price increases.
However, rumor has it that Johnson & Johnson (NYSE:JNJ) will also follow suit with Merck in February when it will give its report on average price increases. Meanwhile, Merck’s stock closed at $61.75 last week, witnessing an increase of $0.55 or 0.90%.