Drug prices surge

Pharmaceutical companies increased wholesale prices for the 50 top-selling branded drugs by an average of 7.82% in 2007, after increases of 6.73% and 6.22% in the previous two years, according to Delta Marketing Dynamics Inc., a health-care marketing research company. The most recent increase is almost double the overall U.S. economy's 4.1% annual inflation rate last year.

Drug makers are trying to keep revenues afloat by raising prices ahead of many drug-patent expirations and the possibility of changing government regulations, part of the presidential candidates' agendas. But aggressive price increases could backfire politically, pushing policies toward greater government power over price negotiations. In some instances, drug makers are raising prices on medications that are due to lose patent protection so that customers will switch to -- and continue to buy -- similar, newer products that enjoy market exclusivity well into the future. It's a tactic that pharmaceutical companies use "to shift patients to next-generation drugs by making old ones so expensive," says Michael Krensavage, a drug-industry analyst with Raymond James & Associates. For example, Sanofi raised Ambien's price ahead of its loss of patent protection last year so that it was more expensive than Ambien CR, a new formulation, to encourage patients to switch to Ambien CR, which will be patent-protected for several more years.

Courtesy of the Wall Street Journal

Steve - you ask yourself how can the government allow this to happen? They are the main problem. The majority of wealth Big Pharma has enjoyed recently is in its renewed deal with the Medicare and Medicaid Drug program. We all suffer because our many of our tax dollars pay for these programs.