The Impact of Amgen’s Price Increases for Enbrel on Pharmaceutical Innovation

The pharmaceutical industry has long argued that high drug prices are a good thing because the profits from these price hikes allow companies to spend more on research and development to discover and launch the cures of the future.

To test the claim that higher drug prices drive innovation, we gathered data from the industry, individual companies, and the FDA to conduct a counterfactual analysis: what would happen at some of the largest pharmaceutical companies in the world if prices on certain blockbuster drugs had remained constant over the last 10 years?

The following case study examines drug pricing at Amgen, a large biotechnology firm with treatments in oncology, immunology, and bone disorders. This analysis is part of a larger study on the impact of pharmaceutical price increases on medical innovation. To read the full study, click here.

Amgen Case Study

• Headquarters: Thousand Oaks, Calif., United States
• Drug Analyzed: Enbrel (etanercept)
• 2021 Company Revenue: $26.0 billion
• 2021 R&D Spending: $4.8 billion
• Other Key Products: Prolia/Xgeva (denosumab), Otezla (apremilast)

With a focus on recombinant DNA technology, Amgen is one of the first and largest biotech companies in the world. The company has leveraged the development of biologic medicines to drive profits and also recently introduced its first biosimilar products to market.

We analyzed Amgen’s pricing behavior for Enbrel, used for the treatment of various types of arthritis. Amgen consistently raised Enbrel’s price since 2011, reaching more than 141 percent higher in 2020.

Despite declining prescribing volume over the last decade, Enbrel’s revenue continued to grow, fueled by price increases. Hence, 100 percent of the drug’s revenue growth came from price increases, totaling $21.3 billion over 10 years.

If the price of Enbrel remained flat since 2011, the loss of $21.3 billion in revenue would have resulted in $3.8 billion less in R&D spending. We estimate that, based on the drug development scenarios used in our analysis, Amgen spends $4.7 billion (IQR: $3.9–5.7 billion) in R&D per new drug developed. Therefore, the loss of Enbrel’s revenue would lead to nearly one less drug developed (estimated 0.82 fewer drugs).

The results are further evidence that profit growth driven by price hikes on older, branded, monopoly drugs like Enbrel rarely leads to the development of innovative new medicines.