New study: Growing share of drug prices go to rebates, supply chain

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WASHINGTON — A new study from the Berkeley Research Group is taking a look at the share of prescription drug spending that’s retained by biopharmaceutical companies, generics makers, pharmacy benefit managers, health plans and other supply chain stakeholders. 

“The BRG study is the first to show what happens when the list price of a medicine meets the forces of private market negotiation, costs associated with a complex supply chain and mandated government discounts in Medicaid, the VA and the 340B program,” said Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, which commissioned the study.

The report found that 47% of total gross spending on medicines is retained by brand pharmaceutical companies, or about $219 billion. Generics companies retain 23%, or about $107.8 billion. It also found that retrospective rebates, discounts and fees have increased from $67 billion in 2013 to $106 billion in 2015. 

“The study begs an important question: Are we doing enough to ensure the growing amount of rebates and discounts flow to the patient?” Ubl said, noting that a patient’s cost-sharing for medicines, including payments for care received prior to meeting a deductible or from a co-insurance, is typically based on the list price of a medicine, not the net prices after rebates and discounts are factored in.

“Our health care system needs to evolve to pay for medicines based on their value to patients, the health care system and society,” Ubl said.

To view the full study, click here.

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