Friday, March 27, 2020

Gross-to-Net Bubble: Brand Drug List Prices Increase 159% and Net Prices 60% from 2007 to 2018

Facing Criticism, Drug Makers Keep Lid On Price Increases - WSJA paper by Hernandez et al. (2020) in JAMA examines trends in branded drug prices using data from SSR Health between 2007 and 2018. The authors find the following:

From 2007 to 2018:
  • List prices increased by 159% (95% CI, 137%-181%), or 9.1% per year
  • Net prices increased by 60% (95% CI, 36%-84%), or 4.5% per year
  • Between 2015 and 2018 with stable net prices, discounts increased from 40% to 76% in Medicaid and from 23% to 51% for other payers. 
  • Between 2015 and 2018 increases in discounts offset 62% of list price increases.

In short, the headline number for some is ‘drug prices increased by nearly 10% per year.’ However, the real story is that because rebates have been increasing by so much, branded drug net prices have only risen by 4.5% per year. The latter figure is above inflation, but not unreasonable. Further, this change in branded drug prices does not take into account the decreasing cost of drugs after they go generic.

Download JAMA Paper >>

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