History of pharmaceutical pricing

Pharmaceuticals used to be one of the best deals in medicine. Prices rarely rose from one year to the next. Some years they even dropped. Almost everyone looked on the pharmaceutical industry with respect because antibiotics, blood pressure medications, and epilepsy drugs saved lives at an affordable cost.

All that began to change in the 1980s. Prices started climbing, slowly at first and then much more rapidly. Companies began bumping prices every few months instead of once a year or less. Increases often outpaced inflation.

Once we hit the 21st century, the pharmaceutical industry lost any sense of shame. Prices began skyrocketing. Many of these medications have been on the market for decades (Premarin has been sold since 1942; Valium since 1963). If other consumer products followed big Pharma’s example, a car sold in 1975 at an average price of $5,000 might now cost as much as $500,000.

We’ve been tracking the costs of medications for 40 years. Here are a few examples of popular prescription medications.

Drug Prices Far Outstrip Inflation

The pharmaceutical industry has historically been a highly profitable business. Investors expect a big return on investment. Since 2000 the price increases for prescription drugs have far outpaced the cost of other consumer goods.

Wall Street Journal article (April 15, 2009) noted that “The prices of a dozen top-selling drugs increased by double digits in the first quarter [of 2009] from a year earlier.”

This happened in the middle of the worst economic downturn in decades, when prices for other essentials remained flat or actually decreased.

In 2015 the Wall Street Journal (Oct. 5) noted that between 2010 and 2014 wholesale drug prices for 30 medications increased 76% over that five-year stretch: “That was more than eight times general inflation.”

Even when sales of a particular drug slow down, companies are likely to raise prices to keep profitability up. That is especially true when there is generic drug competition. As you can see in the table at the right, the “rules” of capitalism do not apply to the pharmaceutical industry. When a brand name drug loses its patent and has to compete with a generic drug, the company raises rather than lowers the price. Since insurance companies won’t pay, the patient is left holding the bag.

Drug prices from 1975 to 2015

* Prices are for 100 pills, from major drug chain stores

 

Drug*

1975

1995

2015

Coumadin (10 mg)

$9.40

$86.19

$346.61

Dyazide

$9.25

$16.20

$258.87

Lanoxin (0.25 mg)

$1.00

$8.59

$850.99

Lasix (40 mg)

$9.73

$19.99

$107.99

Premarin (1.25 mg)

$6.90

$46.89

$501.99

Valium (5 mg)

$8.99

$62.29

$546.99

 

Publication Information

Published on: January 17th, 2019 | Last Updated: October 9th, 2020
Publisher: The People's Pharmacy

© 2021 The People's Pharmacy

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