The news: Drugmakers plan to raise the prices of at least 250 branded medications in the US at the start of 2025, per data analyzed by 3 Axis Advisors and reported on by Reuters.

• The increases are to list prices and do not include discounts or rebates to pharmacy benefit managers (PBMs).
• The median price increase of the drugs is 4.5%, which is consistent with the median for all drug price increases in 2024.
• Just a decade ago, the median price increase for branded drugs was 9%.

What’s driving this decision? While smaller than they used to be, the price hikes are an avenue for drugmakers to bolster their bottom lines.

• Sanofi, which plans to move away from its OTC business in favor of research and development (R&D) efforts for new prescription drugs and vaccines, raised prices for about a dozen of its vaccines between 2.9% and 9%.
• And Pfizer, facing pressure from activist investor Starboard Value to turn its financial performance around, raised the prices of more than 60 of its medications, including a 3% hike on its antiviral drug Paxlovid.

The bigger picture: In light of PBM reform ultimately being excluded from Congress’ year-end spending package, the stage is set for drugmakers and PBMs to continue pointing fingers at each other for rising drug prices.

The price hikes also tell us that drugmakers are taking steps to mitigate the impact of the government being able to negotiate drug prices in Medicare for the first time.

Amid skyrocketing prescription drug spending in the US, government intervention led to the completion of the first round of price negotiations under the Inflation Reduction Act. Knowing they’ll take a hit, drugmakers decided to raise the US prices of certain branded medications to help claw back some of that lost revenue.

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