Countering payers, drugmakers say net prices declined in 2020

Countering payers, drugmakers say net prices declined in 2020

Dive Brief:

About half of gross drug sales earned by three large drugmakers in the U.S. are returned to insurers as rebates or discounts, the companies said in annual pricing reports that showed the net prices of their products declined last year when averaged across their businesses.
In a report published this week, Sanofi said its net price, or what it keeps after rebates and discounts have been factored, declined 7.8% in 2020, following earlier reports from Merck & Co. and Novartis, which reported drops of 0.9% and 0.5%, respectively.
The disclosures from the companies contrast with reports from insurers and pharmacy benefit managers, which often focus on list, or wholesale, prices. Depending on their insurance coverage, consumers may not pay either the net or list price of a drug, although the latter can be used to determine coinsurance payments.

Dive Insight:
Drug pricing has largely been driven off the national agenda by the coronavirus pandemic, the response to which has been led in part by pharma companies developing drugs and vaccines. The long-term pressure to control drug prices in the U.S. hasn’t eased, however, and the issue will likely return to Congress’ agenda once the pandemic subsides.
Insurers often highlight list price increases that take place at the beginning of the year and at mid-year. Price-tracker GoodRx noted a 5% increase averaged over 832 drugs in January, while Rx Savings Solutions’ analysis found an average 3.3% boost.
The average list price increases reported by Sanofi, Merck and Novartis in 2020 were 0.2%, 3.1% and 3.7%, respectively. But their rebate payments to insurers were large, at 54%, 46% and 47% of gross sales, respectively, resulting in net price declines. For Sanofi, rebates amounted to $14.6 billion in 2020.
As the companies all reported averages across their entire U.S. business, the picture for any one drug may be different, however. 
Negotiations between insurers and pharmaceutical companies are largely obscured to patients, who have seen increased costs due to higher copayments and larger deductibles for their drug coverage. This has been particularly acutely felt with branded drugs, newer versions of which are often launched with expensive price tags.
Sanofi points to the example of its insulins, the net prices for which have steadily declined over the past six years. Patients, however, can be charged coinsurance based on the list price, which has more than doubled since 2012 as Sanofi has sought to offset the rebates it owes to insurers.
The Trump administration had proposed banning rebates on pharmacy dispensed drugs covered by Medicare Part D, but that regulation has been delayed until 2023 and could be rolled back by Congress.
Meanwhile, as lawmakers pick up the debate over drug price controls, Congress will likely look at a spate of proposals that made progress in 2019 and 2020. Most notable are a House-passed bill that would require direct price negotiation between the federal government and pharma companies on certain drugs, and a Senate committee-backed bill that would mandate rebates to Medicare on pharmacy-dispensed drugs that had price rises above the inflation rate.

Via Source link