Drugmakers' pricing strategies are not connected to the rebates and discounts they negotiate with pharmacy benefit managers, according to a new analysis from the Pharmaceutical Care Management Association. The study found that prices rise even when rebates are low, or non-existent.
Some high-priced drugs like Sovaldi, a hepatitis C drug which initially cost $84,000, involved no rebates at all until other competitors came to market.
PBMs are hired by America's largest health purchasers to reduce costs by, among other things, promoting generics and negotiating rebates and discounts on brand name drugs. Typically, PBMs pass along 90 percent or more of these savings to plans, which use them to cut premiums, out-of-pocket costs and other expenses. Many health purchasers require PBMs to pass through 100 percent of rebates.
Yet the research, drawing from data on gross and net sales for the top 200 self-administered, patent-protected, brand-name drugs, found no correlation between the price drugmakers set and negotiated rebates.
Large price increases for rheumatoid arthritis drugs and anticonvulsants -- two categories with relatively low rebates -- have resulted in similarly high net price increases for those medications after rebates are deducted.
Meanwhile, the launch prices for drugs introduced from 2012 to 2016 were double the launch prices for those introduced prior to 2012, among the top 200 brand name drugs by 2016 sales. And while rebates for the second drug introduced into a competitive class are higher than the first drug's rebate 72 percent of the time, the chance of the second drug having a higher launch price than the first drug is only 50 percent.
PCMA's DrugBenefitSolutions campaign explains how PBMs reduce costs and how greater reliance on competition and PBM tools generate significant savings for public and private programs. The campaign includes a video on how prescription drug pricing works.