Producer Price Index Jumps in May
Jun. 12, 1998
A drug designed to ease anxiety got most of the blame Friday for aggravating inflation in May.
Lorazepam, the generic version of anti-anxiety drug Ativan, costs about four times more now than it did in March, due to increased production costs and lawsuits from bigger rivals, its biggest manufacturer said.
That fueled a 585 percent rise from April to May in the minor tranquilizer component of the monthly Producer Price Index. That group of drugs is just a small part of the prescription drug sector of the survey, which rose a record 10.7 percent.
The Labor Department, citing confidentiality agreements with the survey respondents, wouldn't confirm which minor tranquilizers caused the spike, but analysts singled out lorazepam.
The blip isn't as big as it looks, analysts cautioned. The Producer Price Index includes about 600 of the 20,000 drugs tracked by pharmaceutical industry groups. The smaller sample means any price change will appear more significant.
Also, lorazepam remains much cheaper than its brand-name equivalent, Wyeth-Ayerst's Ativan, and similar drugs like Xanax and Valium.
``It's a matter of 10 cents a pill, compared to 2 cents a pill,'' said Ira Loss, an analyst with HSBC Washington Analysis. ``That's a big percentage increase, but still a very inexpensive drug.''
Mylan Laboratories, one of the nation's biggest generic drug companies, raised the wholesale price of lorazepam in March from $16.95 for 100 5-milligram pills to $64.31. That price is not the same as the one used by the government to calculate its index.
Once pharmacies buy the drug wholesale, they then set the price consumers pay. A specific figure wasn't available Friday, but analysts estimated a 30-pill supply that cost $3.20 in March cost more than $13 by May.
Roger Foster, a vice president at Mylan, said the company increased prices on 11 of its drugs, including lorazepam and another anti-anxiety drug, clorazepate, due to a growing number of lawsuits from big pharmaceutical companies hoping to stave off competition from cheaper generic drugs.
``We determined that we would have to increase prices or cut drugs from the pipeline,'' he said.
Mylan raised the average wholesale price of another drug in the same class, clorazepate, from $31.95 for a 100-pill supply of 100-milligram pills to $103.74. Clorazepate is the generic version of Tranxene.
The drugs are used to treat ailments like obsessive-compulsive disorder, post-traumatic stress disorder, and to relieve moderate depression or anxiety.