(Bloomberg) — On May 30 last year, the price for a vial of the blockbuster diabetes medication Lantus went up by 16.1 percent. On the next day, Lantus’s direct competitor, Levemir, also registered a price increase — of 16.1 percent.
The pattern repeated itself six months later when Lantus, from French drugmaker Sanofi, was marked up 11.9 percent, and Levemir, made by Novo Nordisk A/S, matched again exactly.
In 13 instances since 2009, prices of Lantus and Levemir — which dominate the global market for long-acting injectable insulin with $11 billion in combined sales — have gone up in tandem in the U.S., according to SSR Health, a market researcher in Montclair, N.J.
Contrary to the consumer’s ideal in which bare-knuckled rivals cut prices to grab market share, competitors in branded pharmaceuticals often drive each other’s prices higher. This behavior, known as “shadow pricing,” is one reason U.S. drug costs are surging. Prescription spending rose 13 percent last year to $374 billion, according to IMS Health Holdings Inc.
Sanofi sets the price of its drugs independently, according to a company statement. Novo Nordisk, based in Bagsvaerd, Denmark, said greater insulin demand is helping to drive price increases.
Within the last two years, Eli Lilly & Co.’s Humalog, a shorter-acting diabetes treatment, and Novo Nordisk’s Novolog have matched three of each other’s price increases, according to data compiled by Bloomberg. Eli Lilly, based in Indianapolis, declined to comment on its pricing moves.
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Rising prices are causing affordability issues for some diabetes patients and frustrating doctors. Many of the leading medications are forms of insulin, which after nearly a century of use, has no generic form as a low-cost U.S. alternative.
Five diabetes treatments were among 27 branded drugs showing price gains of at least 20 percent in typical dosages since the first quarter of 2014, a survey for Bloomberg found. Over five years, prices of dozens of drugs doubled or more while the Consumer Price Index rose only 9 percent.
Prices of Lantus and Levemir vials moved up in tandem by 30 percent over one year. Each carries an average wholesale price of $29.82 per milliliter, according to the survey by DRX, a unit of Connecture Inc. that provides price-comparison software to health plans.
Sanofi and Novo “are taking the same price increase down to the decimal point within a few days of each other,” said Richard Evans, an SSR analyst. “That is pretty much a clear signal that your competitor doesn’t intend to price-compete with you.”
Sanofi has increased Lantus discounts significantly to keep a favorable position on health plans’ coverage lists, according to Mary Kathryn Steel, a spokeswoman. The company reported first-quarter U.S. Lantus sales declined 13 percent.
Rebates on all of Novo Nordisk’s drugs in North America grew to about 50 percent of list prices in 2014, from around 35 percent in 2010, the company said. “We’re always monitoring the pricing environment to stay competitive,” said Ken Inchausti, a spokesman.
Some of biggest price increases are coming from aging blockbusters, including Pfizer Inc.’s erectile dysfunction drug Viagra, according to the DRX survey for Bloomberg. EpiPen, Mylan NV’s injection for allergic reactions, soared 32 percent in price last year and tripled over five years.
Branded prescription drugs “are basically not a competitive market,” when it comes to prices, Stephen Schondelmeyer, a pharmacist and economist at the University of Minnesota, said.