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Viagra and Cialis Price War

A Wall Street Journal article in late 2016, highlighted a concerning trend among rival ED pharmaceutical manufacturers in what amounts to product price fixing. The manufacturers of Viagra, Pfizer, claim about 45% of the ED market, while the manufacturer of Cialis, Eli Lilly, about 30% of the market share. However, over the past five years, both companies have had price rises almost in concert with each other, in what appears to be parallel pricing. No sooner would one company increase the cost of their medication, the other would follow almost immediately with a similar increase. While the consumer may find this activity perplexing, there is nothing illegal about this practice unless both pharmaceutical companies have been in contact and colluded together to fix the price.

Price Fixing?

When the Food and Drug Administration approved the sale of Viagra in 1998 in the US, Pfizer charged US $7 per pill. The sale of Cialis was approved by the USFDA in 2004 at a cost of US $10 per pill. Suddenly in early 2013, Pfizer increased the listed price of Viagra by nearly 10% to US $24 per pill. The very same day, Eli Lilly increased the cost of Cialis by the same percentage to US $26.50 per pill. Later that same year in July, Pfizer’s Viagra went up by 9.4% and the next day, Eli Lilly increased the cost of Cialis by 9.5%. Since then, both companies have had continued price rises of their medications twice a year in tandem with one another. In 2016, Pfizer twice increased Viagra’s cost to achieve a new record of US $48 per pill. Predictably, the price of Cialis also went up in 2016 to US $51 per pill.

Nothing to See Here

Not surprisingly, Pfizer and Eli Lilly publically deny any suggestion of collusion over price fixing. Both companies have stated that all their decisions regarding pricing are made independently. Although it is unlikely that anyone will ever prove the pharmaceutical companies have fixed prices, they are undeniably guilty of gouging. Pfizer now charges double the price for Viagra that they did five years ago, despite undertaking very little market research in the process.

How Much Will People Pay?

It appears that both companies increase their prices at regular intervals, simply to gauge public reaction and to see what they can get away with. The total annual sale of ED medications in the US alone exceeds US $3 billion. However, all of those profits are likely to crash, when patents for Viagra and Cialis expire and the market is flooded with much cheaper generics versions of the same medication.




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