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.
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