ANTIARTHRITIC PRICES DROP 15.4% IN THIRD QUARTER, ACCORDING TO PRODUCER PRICE INDEX FIGURES; HORMONE PRODUCTS AND "OTHER CARDIOVASCULARS" ALSO SHOW PRICE DECREASE

Rx antiarthritic prices dropped 15.4% in the 3rd quarter, according to Producer Price Index figures recently released by the Labor Dept.'s Bureau of Labor Statistics. The antiarthritic category was one of three Rx drug segments to show a price decrease in the July-September period. Prices for hormone products fell 9.1% during the quarter and the index for "other cardiovasculars" (drugs excluding antihypertensives and vasodilators) decreased by 5.0%. The steep decline in the index for antiarthritics coincides with Upjohn's decision in early July to cut Motrin prices by about one-third to stay in line with the OTC ibuprofen products launched by American Home and Bristol-Myers. The drop in the antiarthritic price index occurred during July; the index remained unchanged in August and September. Through the first three quarters of 1984, antiarthritic prices dropped 9.8%. Rx Prices Up 6.5% v. 8% In 9 Months Of 1983 The ibuprofen switch showed price shifting as well as price reductions in the overall cost of drugs. For example, while the Rx antiarthritic category had a sharp price decline in the third quarter, the comparable OTC category (non-aspirin analgesics) increased 2.8%. In the first six months of 1984, that category had a 1.3% increase in prices, according to the Labor Dept. statistics. The aspirin OTC category held steady through the third quarter with no apparent price changes in the wake of the new analgesic ingredient entry. External analgesic compounds, however, reflected a substantial price jump in the third quarter -- the index for that category increasing 1.7% in September. The Labor Dept. figures indicate that overall Rx prices, at the producer level, appear headed for an annual increase of under 10% in 1984. Through the first nine months the index for ethical preparations is up 6.5% compared to 8% through nine months last year (for Bureau of Labor Statistics figures for overall drug and individual therapeutic segments, see box). OTC medications, overall, were up 5.3% in the first nine months of 1984. In the like period of 1983, the OTC class showed a price index increase of 3.1%. The third quarter increase for the Rx drug group was 1.7%. In the third quarter of 1983, Rx prices were up 1.5%. Rx drug prices are still running well ahead of the Producer Price Index for finished goods. The general price index, before seasonal adjustment, decreased .7% in September and is up 1.6% through the first nine months of 1984. The pricing pattern in the antiarthritic category could be a model for activity in other segments as post-62 NDA competition begins in 1985. Antiarthritic prices increased 4% over the first five months of the year, before plunging in July. In cutting the price of Motrin, Upjohn responded to a unique situation in which the firm faced pressure from OTCs manufactured by two major companies with large advertising budgets and direct access to consumers, as well as a price-promoted Rx equivalent. While the overall Rx price index is up at a more moderate level than in the past few years, at least a dozen individual product categories have posted double-digit price increases for the year to date. Some of those price increases could be efforts to make the most of remaining price flexibility in anticipation of increased competition in the near future. The largest increases over the past nine months were turned in by vasodilators (18.9%), cancer therapy products (18.4%), central nervous system stimulants (14.7%), and cardiovascular agents (12.5%). The antispasmodic/antisecretory category has been increasing despite increased competition. Glaxo and Roche have been able to capture a significant segment of the H[2] antagonist market with Zantac, which is priced at a premium to the segment standard, Tagamet. In its first year Zantac generated over $100 mil. In addition, SmithKline Beckman raised prices for Tagamet earlier this year. Although unchanged in August and September, the antispasmodic/antisecretory segment is up 9.5% since the beginning of the year. In 1983, that category increased 6.4% in the first three quarters. Charts omitted.