Amid intensifying anger over the rising cost of medicines, a key piece of data has been missing from the debate — the actual prices after accounting for rebates and discounts offered by drug makers to payers. Now, a new analysis has come up with some numbers and the results are illuminating: Over a recent 11-year period, net prices for hundreds of drugs rose 60%, which was 3.5 times the inflation rate.
Here are the numbers: From 2007 to 2018, list prices on 602 medicines rose by 159%, or 9% per year. However, after accounting for rebates and discounts, net prices for the same drugs increased by 60%, or 4.5% per year. Overall, discounts offset an estimated 62% of list price increases, although this varied substantially among different types of drugs.
The findings are akin to pulling the curtain back on an argument the pharmaceutical industry has long used to deflect criticism over its pricing. Drug makers insist that citing any increases in list — or wholesale — prices is incomplete, if not inaccurate, because these prices do not reflect rebates and discounts paid to pharmacy benefit managers to win favorable placement on insurance formularies.
It is beyond clear that a functional, appropriate and reasonable regulatory mechanism must be devised and put in place so that drug manufacturers will be restrained by force of law from gouging but allowed a reasonable margin of profit, perhaps with a substantive but modest increment awarded to the original developer of a drug over generic copies.
In addition, severe penalties should be imposed upon manufacturers who abuse market monopolies to raise prices to levels that are grossly excessive relative to costs of manufacture and distribution and which effectively impede reasonable and affordable access to a degree that causes economic distress, serious injury and death to persons for whom the drug is essential. In the case of insulin, to my knowledge the most egregious example in terms of cost/price relationship and documented injury and mortality, powerful sanctions including felony criminal prosecution should be invoked. There is no question that pricing of insulin makes the manufacturers and distributors of this drug at the very least knowing and willful accessories to negligent homicide, already documented to count hundreds and thousands of victims.
Lack of transparency is correct! I don’t agree that list prices are important. They’re only important to the PBM’s. Let’s just follow the money and see where the money is going. We’ll all see that the PBM’s which now because of the vertical integration is really Aetna,Cigna and Humana are making all the
Gelt !!!!! The PBM’s aren’t called the Mafia of the drug industry for nothing !
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