- Indianapolis drugmaker Eli Lilly on Monday disclosed more details about the effects of rebates and discounts on pricing, in what has become an increasingly common move among drugmakers to address concerns over the high costs of prescription drugs.
- In its 2016 Lilly Integrated Summary Report, the company said average net price increases for its U.S. product portfolio were only 2.4% last year, even though list prices — which don't include discounts or rebates given to payers — jumped by 14%.
- Merck, Johnson & Johnson and other big pharmas have made similar efforts towards transparency, detailing the differences between list and net prices. While opening up the black box of drug prices some, the moves also help shift blame for high drug costs onto the convoluted workings of the current insurance system.
"What’s confusing in health care is that the amount patients pay is mostly determined by insurance design, not by manufacturers’ prices," Eli Lilly CEO Dave Ricks said in a March 20 blog post. "Recently, more patients have been covered by high deductible plans. These plans often require people to pay 100 percent of the list price of their medication — without the benefit of the rebate the drug company pays — until patients hit their deductibles."
Drugmakers, insurers and PBMs have been pointing fingers at each other, hoping to distance themselves from the growing outcry against high treatment costs. But it's a tactic that, at least for pharma, hasn't garnered them much public favor. An alternative route, and one that has become increasingly fashionable, is becoming more transparent about pricing decisions while limiting price increases to single-digit hikes.
Lilly, for example, estimated that discounts to its U.S. product portfolio have increased from 28% in 2012 to 50% in 2016. The company cited stronger negotiating power from PBMs, competition with other drug manufacturers, required price reductions imposed by the government and changes to its portfolio as reasons for the mounting discounts.
A tightening market for its diabetes portfolio, which has allowed payers to demand more concessions in return for coverage, could also be a factor in the rising discount levels.
The Indianapolis-based company touted its efforts to keep prices low for patients, including a partnership with Express Scripts announced in December that aims to provide discounts for insulin drugs such as Lilly's Humalog, Humulin and Basaglar. That initiative came about one month after Sen. Bernie Sanders, I-VT, called out the 700% list price increase for Humalog since 1996.
On that note, Lilly didn't touch on specific pricing strategies for any of its products. With just two pages of the report dedicated to pricing transparency, the company will likely still be pressed for more details in the future.