- Johnson & Johnson became the latest drugmaker to answer calls from consumers and legislators demanding more information about the pharmaceutical industry's pricing decisions, unveiling on Monday its first report on pricing transparency.
- The 2016 Janssen U.S. Transparency Report sought to explain some of the intricacies involved with clinical development, marketing, patient access to drugs and, perhaps most importantly, coming up with a product's list price — a particularly contentious topic because of companies like Marathon, which faced public outcry over the $89,000 price tag it slapped on an older steroid.
- Against that backdrop, Johnson & Johnson touted that the average annual list price for its products had increased less than 10% year-over-year since 2012 and the average net price in 2016 stayed at a modest 3.5%.
The last thing drugmakers want to be right now is another Marathon, Valeant or Turing. Offering up greater transparency seems to be the best way for medicine makers, pharmacy benefit managers (PBMs) and payers to shield themselves from the the backlash, which has come from the president, senators and consumers.
Like some of the industry's other main players, Johnson & Johnson focused on the difference between a product's list, or starting, price — which is also the usually the price that causes the most public outrage — and it's net price, which is the drug's price tag after discounts, rebates or government-mandated deductions are accounted for.
"At Janssen, we generally limit our annual aggregate list price increase to single digit percentages, below those of our competitive set," the report said. "After accounting for discounts and rebates, we generally realize low- to mid-single digit percentages from our list price increases."
In the last year, Janssen's average list and net prices grew 8.5% and 3.5%, respectively. The report noted the change in net price was below the 4.1% increase seen in the U.S. Bureau of Labor Statistics' (BLS) medical care index during 2016. That increase, however, was the largest experienced since 2007, according to a BLS statement.
Janssen also discussed its interest in value-based contracts. PBMs and biopharmas alike, including Cigna, Harvard Pilgrim and Amgen have signaled their interest in more pay-for-performance partnerships as a means of keeping down outrageous drug prices.
"Instead of paying for volume in health care—the number of procedures performed or prescriptions filled—we should be paying for the value such care delivers," the report said. "Every part of the health care system, including pharmaceutical companies like Janssen, should be held accountable for the value it delivers."
Several companies have taken the stance that setting increases below 10% is acceptable, but backlash to this policy continues and the public is still not pleased with the industry's attempts to curb costs.