Wholesale and Net Drug Prices Decline

Net and wholesale, or list, prices for brand-name drugs have been falling for the past four years due to political pressure on drug manufacturers and pharmacy benefit managers (PBMs), according to pharmaceutical industry research firm Sector & Sovereign. In the second quarter of 2019, pharmaceutical companies increased list prices by 3.1%, compared with 4.6% during the same time last year. In the same period, net prices fell by 5.8%, compared with a 6.1% decline last year.

The wholesale pricing decline can be explained by drug makers declining to raise prices on an “unprecedentedly” large percentage of medications (47% as of 2019’s second quarter), the researchers found. There also was a lack of products that had annual price increases of more than 10%. Three years ago, list prices for branded drugs increased 9.6% overall, driven by a great number of drugs with price hikes above 10%.

Gilead Sciences, Johnson & Johnson, Novo Nordisk, and GlaxoSmithKline experienced net drug price decreases that made up at least 10% of the total net price changes in the pharmaceutical industry.

Formulary exclusions (when PBMs exclude a medication from coverage unless its manufacturer pays a higher rebate) and the use of copay accumulators also contributed to falling net prices, especially for insulin, hepatitis C treatment, and blood thinners.

Source: STAT, September 16, 2019.