US Drug Pricing Stalls. Uh-Oh …


Growth in US brand pharmaceuticals’ list prices has accelerated – but discounts are growing even faster. As a result, on average US brands’ net price growth is very nearly zero

Net price growth is negative in 6 of the 10 therapeutic areas where we have detailed price tracking. In all cases, falling net price is the result of sharp increases in average discounts

Unsurprisingly, each of the markets with falling net prices have 2 or more products that are at least somewhat interchangeable. But this is nothing new – the existence of multiple viable alternatives has been a feature of most therapeutic areas in the US drug market for decades. With only two exceptions (multiple sclerosis and HCV) the acceleration in discounting has occurred among entrants that have all been in the market for at least 3 years. We see two overlapping explanations – both of which point to continued US price weakness

First, the proportion of US beneficiaries subject to co-insurance instead of co-pays is rising; this means beneficiaries newly prefer drugs with lower list prices, and in particular this means that manufacturers’ co-pay card programs must offer these beneficiaries’ larger subsidies in order to keep out-of-pocket (OOP) costs at manageable levels. Co-pay card subsidies, quite obviously, reduce net prices

Second, with the apparent blessing of plan sponsors, it appears that US formulary managers are more frequently excluding non-preferred brands, rather than simply relegating them to higher tiers. This obviates the utility of manufacturers’ co-pay card programs, and intensifies the need for manufacturers to have their brands in preferred formulary positions – for which higher rebates must be paid

For our full research notes, please visit our published research site

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